evaluation of public financial management reform · 2014 us$1.00 d21,097 abbreviations and acronyms...
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Report No. 106635
JUNE 29, 2016
VIETNAM
Evaluation of Public Financial Management Reform
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© 2016 International Bank for Reconstruction
and Development / The World Bank
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Washington DC 20433
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This work is a product of the staff of The World
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Report No. 106635
PROJECT PERFORMANCE ASSESSMENT REPORT
VIETNAM
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
(P075399, P120613, CR.3767, CR.4863, AND TF-50988)
AND
MULTI-DONOR TRUST FUND FOR PUBLIC FINANCIAL MANAGEMENT
MODERNIZATION (P110525, TF-94240)
June 29, 2016
IEG Human Development and Economic Management Department
Independent Evaluation Group
ii
Currency Equivalents (annual averages)
Currency Unit = Vietnamese Dong (D)
2004 US$1.00 D15,744
2005 US$1.00 D15,851
2006 US$1.00 D15,966
2007 US$1.00 D16,085
2008 US$1.00 D16,237
2009 US$1.00 D17,778
2010 US$1.00 D19,497
2011 US$1.00 D21,034
2012 US$1.00 D20,840
2013 US$1.00 D21,095
2014 US$1.00 D21,097
Abbreviations and Acronyms
CAS country assistance strategy
COA chart of accounts
CPS country partnership strategy
CTA chief technical advisor
DMFAS Debt Monitoring and Financial Analysis System
DFID U.K. Department for International Development
EMCC Economic Management Competitiveness Credit
FDS Financial Development Strategy
FMIS financial management information system
GDP gross domestic product
GFS Government Finance Statistics
ICB international competitive bidding
ICR Implementation Completion and Results Report
IDA International Development Association
IMF International Monetary Fund
IP implementation plan
IV&V independent validation and verification
ISR Implementation Status and Results Report
M&E monitoring and evaluation
MDTF multi-donor trust fund
MTR mid-term review
MOF Ministry of Finance
MPI Ministry of Planning and Investment
MTFF Medium-Term Fiscal Framework
MTEF Medium-Term Expenditure Framework
PAD project appraisal document
PDO project development objective
PEFA Public Expenditure and Financial Accountability
PFM public financial management
PFMRP Public Financial Management Reform Project
PMU Project Management Unit
PRSC Poverty Reduction Support Credit
SDR special drawing rights
SEDP Socio-Economic Development Plan
SOE state-owned enterprise
SSD single strategy document
TA technical assistance
TABMIS Treasury and Budget Management Information System
TTL task team leader
TSA treasury single account
UNCTAD United Nations Conference on Trade and Development
VDR Vietnam Development Report
Fiscal Year
Government: January 1 – December 31
Director-General, Evaluation : Ms. Caroline Heider
Director, Human Development and Economic Management : Mr. Nick York
Manager, Economic Management and Country Programs : Mr. Mark Sundberg
Task Manager : Mr. Moritz Piatti
v
Contents
Principal Ratings ................................................................................................................ ix
Key Staff Responsible........................................................................................................ ix
Principal Ratings ................................................................................................................ ix
Key Staff Responsible........................................................................................................ ix
Preface................................................................................................................................ xi
Summary .......................................................................................................................... xiii
1. Background and Context................................................................................................. 1
Scope ............................................................................................................................... 1
Implementation Background ........................................................................................... 1
2. Objectives, Design, and Relevance ................................................................................. 8
Objectives ....................................................................................................................... 8
PFMRP ........................................................................................................................ 8
MTDF II ...................................................................................................................... 8
Related Operations ...................................................................................................... 9
Design ........................................................................................................................... 10
PFMRP ...................................................................................................................... 10
MDTF II .................................................................................................................... 12
Implementation ............................................................................................................. 14
Principle Changes and Dates .................................................................................... 14
General ...................................................................................................................... 15
TABMIS Implementation Experience ...................................................................... 16
Fiduciary Issues and Safeguards ............................................................................... 19
Relevance of Objectives ............................................................................................... 20
Relevance of Design ..................................................................................................... 22
PFMPR ...................................................................................................................... 22
MDTF II .................................................................................................................... 22
3. Achievement of the Objectives ..................................................................................... 23
PFMRP .......................................................................................................................... 23
Objective 1: Strengthen the Borrower’s Capacity to Plan Its Budget: Substantial... 25
This report was prepared by Iradj Alikhani, under the guidance of Moritz Piatti, task manager, who
assessed the project in March 2016. Ali Hashim authored appendix C. The report was peer reviewed by
Salvatore Schiavo-Campo and panel reviewed by Clay Wescott. Viktoriya Yevsyeyeva and Yezena Yimer
provided administrative support.
vi
Objective 2: Strengthen the Borrower’s Capacity to Execute Its Budget: Substantial
................................................................................................................................... 27
Objective 3: Strengthen the Borrower’s Capacity to Report on Its Budget:
Substantial ................................................................................................................. 27
Objective 4: Strengthen the Borrower’s Capacity to Improve the Transparency of the
Budgetary Systems and Processes: Substantial ........................................................ 27
Objective 5: Strengthen the Borrower’s Capacity to Improve the Accountability of
the Budgetary Systems and Processes: Substantial .................................................. 28
MDTF II ........................................................................................................................ 28
Policy Actions Undertaken since Project Closing .................................................... 29
Cross-Cutting Theme ................................................................................................ 29
Contribution of Project Results to Objectives .......................................................... 29
4. Efficiency ...................................................................................................................... 33
PMFRP .......................................................................................................................... 33
MDTF II ........................................................................................................................ 34
5. Outcome Ratings ........................................................................................................... 35
6. Risk to Development Outcome ..................................................................................... 36
Cross-Cutting Risks .................................................................................................. 36
PMFRP .......................................................................................................................... 37
MDTF II ........................................................................................................................ 38
7. World Bank Performance ............................................................................................. 39
Quality at Entry ............................................................................................................. 39
PFMRP ...................................................................................................................... 39
MDTF II .................................................................................................................... 41
Quality of Supervision .................................................................................................. 43
PFMPR ...................................................................................................................... 43
MDTF II .................................................................................................................... 47
8. Borrower Performance .................................................................................................. 49
Government................................................................................................................... 49
Implementation Agencies ............................................................................................. 50
PFMRP ...................................................................................................................... 50
MDTF II .................................................................................................................... 50
9. Monitoring and Evaluation ........................................................................................... 51
What Constitutes a Strong M&E System for PFM Operations?................................... 51
PFMRP .......................................................................................................................... 53
MDTF II ........................................................................................................................ 55
vii
10. Lessons ........................................................................................................................ 57
General .......................................................................................................................... 57
FMIS (TABMIS) .......................................................................................................... 58
References ......................................................................................................................... 62
Appendix A. Basic Data Sheet.......................................................................................... 64
Appendix B. DPO PFM Related Prior Actions ................................................................ 69
Appendix C. TABMIS ...................................................................................................... 72
Appendix D. Updated Results Matrix of MDTF II........................................................... 93
Appendix E. Review of PFMRP ISRs ............................................................................ 109
Appendix F. List of Persons Met .................................................................................... 114
Appendix G. Borrower Comments ................................................................................. 116
Boxes
Box 7.1. Feedback from a Sectoral Team Regarding Its Degree of Involvement in a
Subproject ......................................................................................................................... 48
Box 9.1. Social Media Monitoring of Government Finances through Facebook ............. 55
Tables
Table 1.1. Key Provisions of the 2002 Budget Law ........................................................... 1
Table 1.2. Key Economic Indicators 2004–2014 ................................................................ 4
Table 1.3. Fiscal Situation 2004–2014 ............................................................................... 6
Table 1.4 World Bank Operations Supporting PFM Reforms in Vietnam (2001–2015) ... 7
Table 2.1. MDTF II Subobjectives ..................................................................................... 8
Table 2.2. Project Cost Planned and Actual by Component and Financing Source ......... 12
Table 2.3. Project Cost Planned and Actual by Activity and Financing Source .............. 14
Table 2.4. Key Dates and Modifications .......................................................................... 14
Table 2.5 PEFA Performance Measurement 2013 ........................................................... 18
Table 3.1. Mapping of Legal and Regulatory Achievement to MDTF II PDOs .............. 30
Figures
Figure 4.1. Key FMIS Indicators for Selected Countries ................................................. 34
ix
Principal Ratings
Project 1: Vietnam—Public Financial Management Reform Project
ICRa ICR Reviewa PPAR
Outcome Moderately
Satisfactory
Moderately Satisfactory Satisfactory
Risk to Development
Outcome
Negligible
Negligible Moderate
Bank Performance Moderately
Satisfactory
Moderately
Unsatisfactory
Satisfactory
Borrower Performance Satisfactory Moderately Satisfactory Satisfactory
a. The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsible World Bank department. The ICR Review is an intermediate Independent Evaluation Group (IEG) product that seeks to verify independently the findings of the ICR.
Key Staff Responsible
Project
Task Manager or
Leader
Division Chief or
Sector Director Country Director
Appraisal Edward Mountfield Barbara Nurnberg Klaus Rohland
Completion Quyen Hoang Vu Sandeep Mahajan Victoria Kwakwa
Principal Ratings
Project 2: Vietnam—Multi-Donor Trust Fund to Support Public Financial
Modernization
ICRa ICR Reviewa PPAR
Outcome Moderately
Satisfactory
Moderately
Unsatisfactory
Highly
Satisfactory
Risk to Development
Outcome
Moderate
Moderate Negligible
Bank Performance Moderately
Satisfactory
Moderately
Unsatisfactory
Satisfactory
a. The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsible World Bank department. The ICR Review is an intermediate IEG product that seeks to verify independently the findings of the ICR.
Key Staff Responsible
Project
Task Manager or
Leader
Division Chief or
Sector Director Country Director
Appraisal Quyen Hoang Vu Barbara Nurnberg Ajay Chhibber
Completion Minh Van Nguyen Sandeep Mahajan Victoria Kwakwa
x
IEG Mission: Improving World Bank Group development results through excellence in evaluation.
About this Report
The Independent Evaluation Group (IEG) assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the World Bank’s self-evaluation process and to verify that the Bank’s work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience. As part of this work, IEG annually assesses 20–25 percent of the Bank’s lending operations through fieldwork. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or Bank management have requested assessments; and those that are likely to generate important lessons.
To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, and interview Bank staff and other donor agency staff both at headquarters and in local offices as appropriate.
Each PPAR is subject to internal IEG peer review, panel review, and management approval. Once cleared internally, the PPAR is commented on by the responsible Bank department. The PPAR is also sent to the borrower for review. IEG incorporates both Bank and borrower comments as appropriate, and the borrowers' comments are attached to the document that is sent to the Bank's Board of Executive Directors. After an assessment report has been sent to the Board, it is disclosed to the public.
About the IEG Rating System for Public Sector Evaluations
IEG’s use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach. IEG evaluators all apply the same basic method to arrive at their project ratings. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG website: ieg.worldbankgroup.org.
Outcome: The extent to which the operation’s major relevant objectives were achieved, or are expected to be achieved, efficiently. The rating has three dimensions: relevance, efficacy, and efficiency. Relevance includes relevance of objectives and relevance of design. Relevance of objectives is the extent to which the project’s objectives are consistent with the country’s current development priorities and with current Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers, and Operational Policies). Relevance of design is the extent to which the project’s design is consistent with the stated objectives. Efficacy is the extent to which the project’s objectives were achieved, or are expected to be achieved, taking into account their relative importance. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared to alternatives. The efficiency dimension generally is not applied to adjustment operations. Possible ratings for Outcome: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory.
Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized). Possible ratings for Risk to Development Outcome: High, Significant, Moderate, Negligible to Low, Not Evaluable.
Bank Performance: The extent to which services provided by the Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loan/credit closing, toward the achievement of development outcomes. The rating has two dimensions: quality at entry and quality of supervision. Possible ratings for Bank Performance: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory.
Borrower Performance: The extent to which the borrower (including the government and implementing agency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the achievement of development outcomes. The rating has two dimensions: government performance and implementing agency(ies) performance. Possible ratings for Borrower Performance: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory.
xi
Preface
This Project Performance Assessment Report (PPAR) reviews the performance of the
World Bank’s Public Financial Management Reform Project (PFMRP) and the Multi-
Donor Trust Fund to Support Public Financial Management Modernization – Phase 2
(henceforth MDTF II) in support of the public financial management (PFM) reform
program in Vietnam. The former was approved by the Board on May 22, 2003 in the
amount of SDR39.9 million (equivalent to US$54.3 million), consisting of an
International Development Association (IDA) credit of US$44.3 million and cofinancing
of US$10 million by the U.K. Department for International Development (DFID), with a
closing date of February 28, 2009. The project received an additional financing of
SDR9.2 million (US$14 million equivalent) approved on January 6, 2011. Following
extensions, it closed on October 31, 2013. MDTF II was approved on April 1, 2009, and
was financed through a grant of US$5.8 million provided by the Australian Agency for
International Development, Canadian International Development Agency, Danish
Development Agency, the European Commission, the government of the Netherlands,
and Switzerland State Secretariat for Economic Affairs. Its original closing date was June
6, 2011, which was extended twice to June 30, 2012.
The PFMRP’s project development objectives (PDOs) were to: “to strengthen the
Borrower’s capacity to (i) plan, (ii) execute and (iii) report on its budget and to improve
the (iv) transparency and (v) accountability of the budgetary systems and processes.”
MDTF PDOs, as evaluated here, are “to support Vietnam to strengthen its capacities for:
(a) increased (i) coordination and (ii) transparency in public finance management; (b)
improved revenue mobilization; and (c) (i) effective and (ii) efficient public expenditure
management.” The lending instrument for the first operation was a specific investment
loan and for the second a trust fund.
This report presents findings based on a review of the project appraisal documents, the
Implementation Completion and Results Reports, Implementation Completion and
Results Review, aide-memoires, International Monetary Fund and World Bank reports,
and other relevant materials, including a number of publically available studies by
various donors. An Independent Evaluation Group (IEG) mission visited Hanoi during
March 6–18, 2016, to interview government officials, the staff of the World Bank, and
other development partners and stakeholders (see appendix F for a list of persons
interviewed).
The assessment aims to review whether and how the operations achieved their intended
objectives. The report provides additional evidence and analysis of relevant and
comparative data for a more complete picture of the outcomes and the factors that
influenced them. By covering the period between 2013 and 2016, it offers an opportunity
for broader lessons and a longer time perspective as well as reflection on the
sustainability of policy reforms and long-term factors that facilitated outcomes.
This assessment is part of a larger body of public sector and governance evaluations in
Africa and East Asia that will feed into a synthesis report to draw lessons on cross-
country experience. The reports provide a dedicated appendix on the design,
xii
implementation, and utilization of financial management information systems (FMIS),
which have been at the core of the reform programs.
Following standard IEG procedures, a copy of the draft report was sent to the relevant
government officials and agencies for their review and feedback. Their comments were
taken into account and Borrowers comment are included in appendix G.
xiii
Summary
This Project Performance Assessment Report (PPAR) reviews the performance of the
World Bank’s Public Financial Management Reform Project (PFMRP) and the Multi-
Donor Trust Fund to Support Public Financial Management Modernization – Phase 2
(henceforth MDTF II) in support of the public financial management (PFM) reform
program in Vietnam. The former was approved by the Board on May 22, 2003, in the
amount of SDR39.9 million (equivalent to US$54.3 million), consisting of an IDA credit
of US$44.3 million and cofinancing of US$10 million by DFID, with a closing date of
February 28, 2009. The project received an additional financing of SDR9.2 million
(US$14 million equivalent) approved on January 6, 2011. Following extensions, it closed
on October 31, 2013. MDTF II was approved on April 1, 2009, and was financed through
a grant of US$5.8 million provided by the Australian Agency for International
Development, Canadian International Development Agency, Danish Development
Agency, European Commission, the government of the Netherlands, and Switzerland
State Secretariat for Economic Affairs. Its original closing date was June 6, 2011, which
was extended twice to June 30, 2012.
The PFMRP’s project development objectives (PDOs) were to “to strengthen the
Borrower’s capacity to (i) plan, (ii) execute and (iii) report on its budget and to improve
the (iv) transparency and (v) accountability of the budgetary systems and processes.”
MDTF PDOs, as evaluated here, are “to support Vietnam to strengthen its capacities for:
(a) increased (i) coordination and (ii) transparency in public finance management; (b)
improved revenue mobilization; and (c) (i) effective and (ii) efficient public expenditure
management.” The lending instrument for the first operation was a specific investment
loan and for the second a trust fund.
Both projects experienced slow initial starts and were delayed due to different factors.
The PFMPR implementation was initiated at a time Vietnam’s shared prosperity strategy
was quite effective and the country was moving quickly toward becoming middle income
by 2010. However, the pace of reforms slowed down during the 2000s, as evidenced by
the late implementation of the treasury single account and adoption of the chart of
accounts. The delays also were due to technical reasons, notably the implementation of
an information technology system, the procurement of which proved more complicated
and time-consuming than expected. Implementation delays were compounded during the
financial crisis and the period between 2008 and 2012, when the government was
preoccupied with a significant tightening of the macroeconomic and fiscal framework
and PFM reforms were not considered priority solutions to these problems. Nevertheless,
various systems—notably the Treasury and Budget Management Information System
(TABMIS), the treasury system which consumed the bulk of financing—were completed
between 2012 and 2013. An additional financing approved in 2011 helped in this respect.
Initial implementation of MDTF II was also slowed by the financial crisis. Another
contributing factor was the need to prepare implementation plans (IPs) based on the
demand-driven approach embedded in project design. Because of the semi-experimental
nature of the approach and broad initial criteria, the first IP plan took time to be finalized.
The process was smoother for the second and last IP that, learning from earlier
xiv
experience, empowered the various departments within the Ministry of Finance (MOF) in
the design and implementation of activities.
Despite progress in terms of delivery of output, project outcomes appeared at risk in 2013
when the Public Expenditure Financial Accountability (PEFA) report was published. The
various indicators were compiled based on 2011–2012 data, and most rated C or below
on a scale of A–D. The analysis identified policy actions needed to improve various
areas, notably adopting a new budget law and an effective TABMIS, generalizing
medium-term expenditure frameworks, and completing various reforms that had been
initiated but not completed. The situation had evolved favorably during the last two years
of implementation of both projects, but many actions were still pending as they closed—
notably in the case of MDTF II.
The Vietnamese experience is different from that of other countries. Capacity building
not only proved to be effective and sustainable, but also top-down and bottom-up
ownership policy actions not yet completed at closing were followed through by the
government from 2014 to 2016. This review estimates that at least 22 important PFM
reforms are directly attributable to the MDTF II. Similarly, with regard to coverage,
functionality, and reliability, TABMIS appears to be one of the best performing systems
implemented under similar World Bank operations. As a result, this assessment’s
appreciation of both operations differs from their completion reports and IEG validation
exercises.
Both operations benefitted from strong fundamentals, notably high strategic relevance.
Similarly, their results framework had shortcomings, one as the result of the use of log
frame, the other from the demand-driven nature of subprojects funded under MDTF II,
which was partly addressed through restructuring of results once subprojects were
known. Otherwise, both operations’ objectives were sufficiently ambitious, while
realistic. The chain of logic between components and their objectives was clear and
convincing, notably in the case of PFMRP where the sequencing of subcomponents
where meticulously thought through. Finally, the lending instruments were appropriate.
Notwithstanding some weakness, relevance of design for both operations is considered
substantial.
PFMPR achieved its various objectives, principally on the successful implementation of
TABMIS as well as development of the debt database and piloting of the medium-term
expenditures framework in four ministries and three regions. As a result, the approach is
being mainstreamed through the new budget law. Considering progress toward achieving
objectives, all four are rated substantial. The mapping of various finalized policy actions
against the five objectives of the MDTF II leads to the conclusion that one has been fully
met with a rating of substantial, while the other four have exceeded expectations and are
rated high.
Delays in implementation are a potential source of inefficiency, however, the analysis
indicates that implementation periods were reasonable, the TABMIS was cost-effective,
and, most importantly, policy action under MDTF II conceptually yielded high rates of
return. For these reasons, PFMRP efficiency is considered substantial and MDTF II’s is
xv
high. Based on the ratings for relevance, achievement of objectives, and efficiency,
PFMRP outcome is rated satisfactory and MDTF’s is highly satisfactory.
Both operations are expected to be sustainable. The recurrent costs of TABMIS are fully
covered by government, the new budget law strengthens PFM systems, and the policy
actions have been implemented and seem largely irreversible. Based on consideration of
these and other factors, risks to sustainability of achievements under PFMRP and MDTF
II are considered respectively moderate and negligible.
PFMRP’s strengths included a well thought through design that is reflected in highly
satisfactory quality at entry. Uneven supervision is reflected in moderately satisfactory
supervision performance. Bank performance is thus rated satisfactory. MDTF II benefited
from sound quality at entry, given the iterative demand-driven nature of the project, and
effective supervision and project restructuring. Both dimensions are rated satisfactory, as
is overall rating for Bank performance. The government gave increasing priority to PFM
reforms. The failure to better integrate the development and recurrent budget represents
the most significant issue. Its performance under both operations is rated satisfactory.
Implementation agency performance is broadly defined to include various departments
within the MOF. It was satisfactory in the case of PFMPR and highly satisfactory in the
case of MDTF II largely because of proactive follow-up of yet to be completed actions
after the project had closed. In both cases, borrower performance is rated satisfactory.
The project offers a number of important lessons.
General
An evolving project-level monitoring and evaluation (M&E) may be a good
substitute for a formal one that is preset at appraisal. This can be the case
when the iterative, demand-driven nature of the activities does not allow clear
measurable objectives to be set from the outset. Also, approaches such as use of
social media may be informative and cost effective. Finally, standalone studies
and assessment provide important complements to results-based M&E.
Outcomes for PFM operations are difficult to measure at closing. The
Vietnamese cases show how ongoing policy actions take time to mature as do
systems. In this instance, project outcomes became fully apparent in early 2016. In
cases elsewhere, the initial results may be undermined by a number of factors
including poor governance. Even though periodic PEFA assessments are not
suitable as M&E for operations because of lags in indicators, they can provide
useful information on PFM program progress over time.
PFM reforms need decades to complete. Vietnam is well into its second decade
of reform. Both the government strategy and actions needed to reach the higher
level objective of good governance show the need for this effort to be sustained
into the 2020s. In this context, continued effective provision of financial and,
more importantly, knowledge by development partners, will be needed. Strong
donor harmonization and coordination have been enabling factors so far.
Coordination has become more important now that some partners are no longer
xvi
participating in the follow-up to the MDTF under preparation, providing separate
support instead.
The funding of operations may not be commensurate with their impact.
Significant results were attained under MDTF II even though the grant amount
was small. The supervision resources devoted to the project were large compared
to disbursements because they underpinned an important policy and institutional
dialogue. The World Bank correctly continued to support project implementation,
even at a time were difficulties were experienced. On the government side,
capacity built was sustained and, together with substantial ownership, resulted in
actions being continued beyond the timeframe of the project.
Technical assistance operations that are initially focused on a single ministry
may have a greater chance of success. Clarity in ownership and leadership of
the activities by the MOF, which is the leading institution in PFM, was essential
and avoided overcomplicated coordination mechanisms in the case of MDTF II.
However, future PFM reforms will inevitably have to cover multiple entities and
would need to ensure activities are well-sequenced and coordinated.
FMIS (TABMIS)
Strong and sustained government and MOF commitment is essential. Since
these projects can take 7–10 years or longer for completion, it is necessary to
maintain this commitment over a long period which can extend beyond an
election cycle. This commitment can be achieved better if projects are framed as
public expenditure management systems reform, rather than just accounting
systems reform. In Vietnam, government support was particularly important to
address project-staffing issues, resolve business process issues, and tackle
interorganization issues.
Comprehensive FMIS implementation as in Vietnam takes about 10 years to
complete. These projects are characterized by slow disbursement rates over the
initial years, which are spent in systems design, testing, and piloting. The
disbursement profile needs to be adjusted accordingly.
Continuity in the project team contributes to success. There was stability on
both the government and Bank side, and key members of the team that designed
the project remaining engaged in its implementation for the first few years
ensured an effective transfer of know-how to field-based and other staff.
Systems sequencing is key. TABMIS implementation in Vietnam illustrates how
project implementation for similar systems needs to be phased to achieve
significant outcomes, such as good budgetary control and cash management early
in the project. It is first necessary to implement modules to cater to core budget
execution processes and processing of payments and receipts transactions, across
government, before going on to other noncore elements, such as fixed assets and
inventory management and human resource or fleet management.
Systems deployment strategies should make sure that a large part of the
budget is covered from the outset. A major part of the budgetary resources
should be subjected to ex-ante budget and cash control so that meaningful fiscal
control and cash management are possible at an early stage in the deployment. A
deployment across treasury offices through which these transactions are routed,
may be sufficient for this purpose.
xvii
Spending unit access is a challenge in the use of treasury centric systems. The
lack of spending unit access inhibits ownership at the line ministry and end-user
level. This often leads to line ministries developing independent financial systems
for their own management use, as in the case of Vietnam. Avoiding this outcome
requires that once the basic treasury system has been implemented and is
operating in stable mode, the large spending units be empowered and made
responsible for the bulk of transactions.
Availability of specialized information technology (IT) expertise within the
Bank project team is critically important to assure the quality of design and
supervision of the projects that support development of complex IT systems. The Bank team needs to have experienced specialists on board or available to
advise the client on important technical issues during the design and
implementation phases. These specialists also need to be familiar with
procurement practices and procedures for IT related procurements and the World
Bank rules under which they will need to be applied.
Staff in the implementing agencies should recognize the inevitability of
change. Resistance often comes from staff responsible for operating the legacy
systems as well as those who are used to doing their regular work in a given way
and are reluctant to change. MOF management has a major role to play.
The design of the main consultancy package has proved to be a significant
bottleneck for TABMIS implementation. The consultancy package should be
designed to ensure that appropriate consulting help is available throughout the
various stages of the project.
Not all needs may be foreseen during the project's preparation and original
design. The number of system users of TABMIS increased threefold between
design and full rollout and had to be accommodated.
Nick York
Director
Human Development and Economic Management
Independent Evaluation Group
1
1. Background and Context
Scope
1.1 This Project Performance Assessment Report (PPAR) reviews the performance of the
World Bank’s Public Financial Management Reform Project (PFMRP) and the Multi-Donor
Trust Fund to Support Public Financial Management Modernization—Phase 2 (henceforth
MDTF II) in support of the PFM reform program in Vietnam. Information pertaining to
project objectives, funding, key dates, and more are provided in chapter 2.
Implementation Background
1.2 The political economy of reforms in Vietnam, including governance and PFM, is
discussed in an assessment by the Independent Evaluation Group (IEG) of various budget
support operations implemented between 2006 and 2012 (IEG 2015). This PPAR draws on
its summary of experience with PFM reforms. However, it should be recognized that the
socialist accounting system in Vietnam only prepared a record of financial transactions for
statistical and revenue purposes. Accountants were given the same status as bookkeepers, and
regulation and law determined accountability, not efficiency and effectiveness. A major
change in mind-set was needed to move from top-down central planning and budgeting to a
results-oriented, more transparent, and accountable approach, in parallel with
decentralization of responsibilities to subnational governments.
1.3 Changes began with the adoption of a state budget law in 1996, leading to reforms
such as: (i) implementing a consistent format for Government Finance Statistics (GFS) on
fiscal information; (ii) adopting of a uniform budget manual for use starting with the 1998
budget; (iii) prudential regulations on capital adequacy, related-party lending, foreign
exchange operations, bank inspection, collaterals, and deposit insurance; (iv) issuing
accounting and audit standards; and (v) budget publication starting with the 1998 state
budget (Wescott, Nguyen, and Vu 2009). The new budget law in 2002 laid down further
building blocks of a modern budgetary system. The project appraisal document (PAD) for
PFMRP presented an assessment of the 2002 law (see table 1.1).
Table 1.1. Key Provisions of the 2002 Budget Law
Area Improvements
Managing
decentralization
The new law further clarifies the roles and responsibilities of central and subnational
government.
Provincial people's councils are given more explicit powers and duties to prioritize
resources, including determining allocations to different sectors and transfers to lower tiers.
They also are given more explicit powers and duties to mobilize resources, with some taxes
that were assigned to central government now shared.
Local spending units will gradually be given greater budget flexibility.
Local planning will be promoted through the agreement of transfers from the center to
provinces for stable periods of three years, in return for which provinces must produce
medium-term expenditure plans.
Strengthening
transparency Builds on recent efforts to promote fiscal transparency and accountability, allowing for more
detailed publication of final accounts for 2000 and the budget plan for 2002 and providing
an enforcement mechanism to make communes post their budgets outside offices.
2
and
accountability Henceforth, budgets will be published as soon as they are approved, along with all
procedures and regulations.
The National Assembly is given powers to decide detailed appropriations for ministries and
transfers to provinces, whereas previously they only approved allocations at the sector level.
Promoting
administrative
rationalization
and
streamlining
The division of responsibilities between the Ministry of Finance (MOF), the State Treasury
Department (within the MOF), the Ministry of Planning and Investment (MPI), and the State
Bank of Vietnam are further clarified.
The MOF will be the lead agency responsible for budget formulation and debt management.
The State Treasury Department will be the lead agency responsible for budget execution and
for government financial management information.
A major effort is under way to simplify and strengthen financial management and reporting
requirements. Duplicative and low-value added stages in the budget formulation and
allotment processes are being eliminated or consolidated.
Area Issues
Fiscal
sustainability Potential declines in oil revenue.
Growing mismatch between increasing capital expenditure and declining nonwage recurrent
expenditure. Prioritization is carried out separately for capital spending (by MPI) and for
recurrent spending (by the Ministry of Finance), with significant imbalances between the
two.
Pressure for further civil service pay increases.
Uncertainties associated with extra-budgetary accounts, nonperforming loans to state-owned
enterprises, and other contingent liabilities.
Processes for prioritizing expenditures remain ineffective.
The absence of a credible multi-year fiscal framework means that expenditure planning is
conducted without reference to medium-term resource constraints.
Operational effectiveness is limited. Vietnam lacks even a basic mechanism for monitoring
the actual outcomes of public spending and for feeding this information back into future
resource allocation decisions.
Weaknesses in transparency and accountability continue to exist, perpetuating corruption
and waste.
Cross-cutting
PFM MIS The lack of a fully consolidated budget makes it difficult to monitor total revenues and
expenditures as well as the true fiscal position.
Extra-budgetary funds, on-lent official development assistance, and much of commune-level
spending are not consolidated into the budget.
The lack of common accounting structures results in numbers that are inconsistent and hard
to compare.
The lack of integrated, electronic data recording and reporting results in laborious manual
consolidation and manipulation of data from multiple satellite databases and in financial
reporting which is neither timely nor accurate.
These deficiencies contribute to the poor flow of budgetary information between
government ministries, provinces, donors, and the public.
1.4 This was followed by the enactment of new budgetary oversight regulations that
mandated disclosure of budgetary data at all levels of government and increased transparency
in public investments projects. Establishment of an Independent State Audit in 2005 was
important in promoting accountability of public agencies. As a first step in improving the
budget’s mid-term planning framework, the government began piloting a Medium-Term
Expenditure Framework (MTEF) in four sectors and for all provinces (with the support of
PFMRP) with the intention of mainstreaming the approach in due course. This is now
mandated under the latest budget law approved in 2015. Improvements included
3
consolidation of capital and recurrent budgets into a single budget and introduction of budget
norms of expenditure planning.
1.5 Despite these developments in Vietnam’s PFM system, by the mid-2000s much
remained to be done for PFM systems to meet international standards. The key challenges to
improving budgetary efficiency included using internal standards of accounting in the public
sector, introducing internal audit mechanisms in public agencies, changing the practices of
off-budget borrowing for public investment projects, limiting carry-over of large a portion of
annual spending without subsequent reporting, reducing inefficiency in public investment
program, and addressing shortcomings in public financial management information systems
(World Bank 2005). Some of these areas became the focus of operations.
1.6 Between 2007 and 2012, the PFM system was in a process of change, although
progress was slower than expected given the ambitious timing built into the government’s
reform program. A modern treasury management system (Treasury and Budget Management
Information System, TABMIS) and enhanced external audits were introduced. Nevertheless
the 2013 Public Expenditure and Financial Accountability (PEFA) report diagnosed PFM
issues (based on 2011 and 2012 information) and revealed significant remaining
shortcomings (Government of Vietnam 2013). The PEFA findings are discussed in chapter 2.
A major finding of the present review is there was an acceleration of policy actions and
capacity improvements between 2012 and early 2016 (not captured by the PEFA) that are
largely attributable to or associated with support provided by both operations. To avoid
duplication, this is detailed in the efficacy section of the report.1
1.7 However, it is important to note an important institutional issue has not yet been fully
addressed. The responsibility for recurrent expenditures rests with the Ministry of Finance
(MOF), while that for public investment lies with the Ministry of Planning and Investment
(MPI)—a legacy from central planning. The problem of dual budgeting in Vietnam, as
elsewhere, consists of lack of integration of capital and recurrent expenditure planning—not
solely whether the capital and recurrent budgets are prepared by the same ministry or
different ministries. If separate ministries of finance and planning are merged without any
other action, coordination between investment and current expenditure processes may remain
weak. In contrast, even with two separate ministries, if coordination between the two
decision-making processes is close at every major step, the capital and current budgets end
up consistent with each other and with government policies, and the dual budgeting problem
does not arise. The issue of dual budgeting is therefore institutional, not organizational, and
rooted in the political economy of the country.
1.8 As noted in the 2003 project appraisal document of PFMRP, “the government is
increasingly aware that it needs to move beyond ‘dual budgeting’ to integrated planning of
development policy, recurrent and capital expenditure within a single medium-term
framework, consistent with a single, forward-looking fiscal framework” (World Bank
2003a). Even though these issues have been alleviated through various measures,
institutionally budget formulation and implementation remain segmented. This issue is taken
up again under sustainability. The concept note for the 2016 PER2 notes a series of other
issues, notably related to public administration reform.
4
Macroeconomic, Fiscal, and Public Expenditure Performance3
1.9 Macroeconomic stability of PFMRP was implicitly assumed in 2003, whereby high
gross domestic product (GDP) growth would be sustained and fiscal deficits would remain
manageable at around 2.5 percent of GDP (World Bank 2003a). Internal and external factors
changed this situation toward the end of the decade, possibly contributing to slow-down of
reforms observed under the Project Implementation Review (PIR) and the last two operations
under the Poverty Reduction Support Credit (PRSC) series. In summary, Vietnam’s economy
went through a turbulent period between 2007 and 2013. After a prolonged period of growth
at an average of about 7 percent per year, the Vietnamese economy began overheating during
2007. GDP growth in 2007 rose to 8.5 percent, and by early 2008, inflation surpassed 20
percent (table 1.2).
1.10 The government recognized the presence of a financial bubble and adopted a package
of policy measures in March 2008 to prevent further overheating and to curb inflation. The
stabilization program included a reduction of recurrent expenditures by 10 percent and a
discontinuation of several nonessential public investment projects. Credit growth was kept to
25 percent during 2008. The authorities switched from stabilization to stimulus in the second
half of 2008 as the financial crisis spread from the United States to the rest of the world and
affected Vietnam’s exports. This resulted in a substantial increase in the budget deficit in
2009 to 7.2 percent of GDP, compared to 2.2 percent in 2008 (see table 1.2).
Table 1.2. Key Economic Indicators 2004–2014
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Output, Employment, and Prices
GDP (% change year-
to-year
8.4 8.2 8.5 6.3 5.3 6.8 6 5 5.4 6.0
Industrial production
index (% change)
17.2 17.0 16.7 13 7.6 9.3 6.8 4.8 5.9 7.6
Unemployment (%
urban areas)
5.3 4.8 4.6 4.7 4.6 4.3 3.6 4.2 3.6 3.4
Consumer price index
(%, period average)
8.8 6.7 12.6 23.1 6.7 9.2 18.7 9.1 6.6 4.1
Fiscal Balance (as % of GDP)
Overall balance,
including off-budget
items
— — -3.6 -2.2 -7.2 -3.0 -1.7 -7.5 -7.4 -6.2
Foreign Trade, BOP, and Debt
Exports of goods (US$,
billion, FOB)
32 40 49 63 57 72 97 115 132 150
Imports of goods (US$,
billion, FOB)
35 43 59 76 65 85 107 114 132 148
Current account balance
(as % of GDP)
-1.1 -0.3 -9.8 -11.9 -6.5 -3.8 0.2 6.0 5.6 4.8
5
FDI (net inflow, US$,
billion)
1.9 2.3 6.6 9.3 6.9 7.1 7.1 7.2 8.1 8.7
Total PPG debt (as % of
GDP)
45.6 42.9 46.9 48.4 46.7 48.5 54.5 59.6
Foreign exchange
reserves (months of
imports of G&S)
3 3 3 3.8 1.9 1.4 1.4 2.3 2.6 2.8
Financial Markets
Domestic credit (%
change)
31.7 25.4 53.9 25.4 39.6 32.4 14.3 7.0 8.8 12.7
Short-term interest rate
(3-month deposit)
7.8 7.9 7.8 8.1 10.7 11.6 14.9 9.0 6.5 5.5
Exchange rate (1,000
D/US$)
16.5 17.5 17.8 19.5 20.8 20.8 21.1
Stock market—VN
index (July 2000 = 100)
308 752 972 316 495 484 351 414 505 546
Memo: nominal GDP
(US$, billion)
79.8 90.8 92.4 103.6 122.8 141.5 171 186
Source: World Bank estimates. Note: — = not available; BOP = balance of payment; FDI = foreign direct investment; FOB = free on board; G&S = goods and services; GDP = gross domestic product; PPG = public and publicly guaranteed; VN = Vietnam Ho Chi Minh Stock Index.
1.11 Vietnam experienced a period of macroeconomic destabilization in 2009–2010 from a
major fiscal expansion and subsidized credit growth. Although it regained macrostability in
2011, weaknesses remained. The procyclical fiscal position of recent years and resultant
buildup of public debt increased macroeconomic risks. The economy was vulnerable to
internal and external shocks. Vietnam’s current public debt level was higher than that of its
regional comparators. The International Monetary Fund (IMF) estimates that a debt to GDP
ratio of no more than 40 percent to 45 percent should be the medium-term benchmark for
Vietnam (IMF 2014). The latest estimate of debt to GDP (2015) suggests that it has risen
above 60 percent.4 Substantial improvements in fiscal management and institutional
transformation in the state-owned enterprise (SOE) and banking sectors were still required to
reduce the risks to more manageable levels. The situation may improve somewhat once the
impact of recent reforms—notably those associated with MDTF II—are reflected in the key
indicators. Also, inflation has abated and is estimated at around 0 percent (2015–2016).
1.12 Public expenditures were affected by macroeconomic conditions. The overview of
public expenditures is based on available data.5 As noted in table 1.3, government
expenditures as a percentage of GDP have declined slightly since the mid-2000s. The fiscal
envelope increased substantially in 2009 as a result of the government’s response to the
financial crisis. However, total expenditures fell from 33 percent of GDP in 2009 to an
estimated 27.6 percent in 2013, mainly on the basis of a 4 percentage point decline in capital
expenditures. The government has maintained its focus on social spending. A positive factor
is that the coverage of expenditures by the budget has improved. Off-budget expenditures are
recorded and include items such as social security payments that are being brought under the
budget under new law.
6
1.13 The decrease in capital expenditure can be initially considered as a positive
development given the inefficiencies in Vietnam’s large public investment program, on the
condition that the reduction in the envelope has been made through the elimination of
projects with the lowest rates of return. This has not been established.6 However, the latest
investment figure for public capital investment hovers around 5 percent of GDP, which may
be too low to sustain high growth, unless it leverages considerable public-private
partnerships (PPP) in infrastructure and other sectors in activities with high rates of return.
Table 1.3. Fiscal Situation 2004–2014
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Revenue 27.8 28.4 29.7 29.4 29.3 25.8 27.3 26.0 22.7 23.1 21.9
Current revenue 25.2 26.1 27.1 26.1 26.4 23.1 24.3 23.6 20.9 22.8 21.8
Tax 21.8 22.8 24.3 23.5 24.4 20.6 22.4 22.3 19.0 19.5 18.2
Grants 0.4 0.5 0.8 0.5 0.6 0.4 0.5 0.4 0.3 0.3 0.2
Expenditure 27.7 29.9 30.1 33.0 31.5 33.0 30.3 27.7 30.2 30.5 28.2
Recurrent 16.9 17.9 18.5 20.3 19.7 18.1 18.7 17.9 19.9 21.1 20.3
Administration 2.2 2.2 1.9 2.8 2.6 2.2 2.6 2.6 2.7 2.7 2.5
Economic 1.4 1.4 1.5 1.4 1.4 1.5 1.7 1.6 1.8 2.08 1.9
Social 7.7 7.3 8.0 8.0 7.7 8.2 8.4 8.0 8.3 9.9 10.9
Interest payments 1.0 0.8 0.8 1.1 1.1 1.1 1.2 1.1 1.2 1.3 1.7
Other recurrent 4.6 6.1 6.3 6.9 6.9 5.0 4.8 4.6 5.8 5.2 3.4
Capital 10.7 12.0 11.6 12.7 11.8 14.9 11.6 9.7 10.3 7.6 5.3
—On budget NA NA NA NA 8.0 10.0 8.5 7.5 8.3 5.9 2.8
—Off budget NA NA NA NA 3.8 4.9 3.1 2.2 2.0 1.7 2.5
Budget balance 0.1 (1.4) (0.4) (3.6) (2.2) (7.2) (3.0) (1.7) (7.5) (7.4) (6.2)
Primary balance 1.1 (0.6) 0.4 (2.5) (1.1) (6.1) (1.8) (0.6) (6.3) (6.1) (4.5)
Public savings 10.8 10.6 11.2 9.1 9.6 7.7 8.6 8.0 2.8 2.5 1.6
Source: World Bank estimates. Note: NA = not available.
Bank and Development Partners’ Support to PFM 2003–2015
1.14 The operations funded by development partners supported policy actions and capacity
building to improve public financial management in Vietnam. The assessment of operations
and their analytical underpinning should take into account this factor and that they were
mutually reinforcing. Specifically, budget support (PRSC and PIR) would include policy
actions that had been identified through analytical work, often prepared with the help of
technical assistance (TA), and implemented and followed through with the support from
traditional projects (notably PFMRP and MDTF). PFMRP in turn allocated much of its
funding to support the implementation of a treasury system that provided the information
technology (IT) backbone for sound, accountable, and transparent financial management.
7
Finally, MDTF helped units within the Ministry of Finance define small subprojects that
would help prepare and implement various policy actions, build capacity within MOF, and
install a new mind-set that built ownership and understanding of the goals from the ground
up. This change may help explain why even in the absence of World Bank and development
partner operations, many initiatives that had been started prior to 2014 were followed through
afterward. This complementarity also explains various references to the early PRSC
evaluation and why the two operations covered by this report are evaluated together and with
full consideration of the context described above.
1.15 More specifically, some key areas, such as planning process, audits, debt
management, and public investment, became the focus of the second PRSC series (2007–
2012), with complementary capacity building and TA provided under PFMRP and MDTF I
and II. A parallel development policy operation (DPO) series (PIR) was launched in 2009 as
an additional boost for public investment reforms that had been largely stagnant between
2007 and 2009. These operations were part of the series of complementary programs and
operations overseen by the World Bank, implemented by the government, and cofunded by
the World Bank and donors. Finally, the Economic Management Competitiveness Credit
(EMCC) replaced the PRSC series. Its operations focus on fewer sectors and aim to tackle,
with apparent success in the PFM area, “big ticket items” such as the public investment and
2015 budget laws that had eluded previous attempts. Timelines from approval to closing are
summarized below in table 1.4. The EMCC third and final operation in the series was
approved in May 2016.
1.16 This reinforcing combination of operations is conceptually strong and contributes to
the desired development outcomes—when properly coordinated. The PRSC provided
potential impetus for accelerating and focusing on policy actions, thus framing the program.
The PFMRP delivered the large building blocks for setting-up a sound PFM system,
including funding the financial management information system (FMIS), called TABMIS in
Vietnam, and providing capacity building. The MDTF availed focused grant resources to the
MOF for diagnostic studies and TA to ensure important details and needed institutional and
policy reforms at the MOF level did not fall through the gap, providing building blocks for
the PFMRP.
Table 1.4 World Bank Operations Supporting PFM Reforms in Vietnam (2001–2015)
Operation
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
PRSC BS BS BS BS BS BS BS BS BS BS BS BS
PIR BS BS BS
EMCC BS BS BS
PFMRP TA TA TA TA TA TA TA TA TA TA TA
MDTF I SIL SIL SIL SIL SIL
MDTF II SIL SIL SIL SIL SIL
AAA (MDTF III) SIL Note: AAA = analytical and advisory assistance; BS = budget support; TA = technical assistance; SIL = specific investment loan; EMCC = Economic Management Competitiveness Credit; MDTF = multi-donor trust fund; PFMRP = Public Financial Management Reform Project; PIR = Project Implementation Review; PRSC = Poverty Reduction Support Credit.
8
2. Objectives, Design, and Relevance
Objectives
PFMRP
2.1 The project development objectives (PDOs) from the Development Credit Agreement
(DCA) are unchanged by additional financing: “to strengthen the Borrower’s capacity to (i)
plan, (ii) execute and (iii) report on its budget and to improve the (iv) transparency and (v)
accountability of the budgetary systems and processes”. The statements in the DCA and PAD
are largely identical, even though the transparency objective is not mentioned in the PAD
(appendix A) as a project objective, but rather a higher level one. This review encompasses
all five objectives. PDOs, while numerous, are well defined and reflect the appropriate level
of ambition (strengthen and improve), which as noted in the monitoring and evaluation
(M&E) section is contradicted by some indicators that refer to “best practice.”
MTDF II
2.2 Original (as per grant agreement, section 2.01): “The objectives of the Project are to
support the Recipient to develop capacities to strengthen its public finance management
system through: (a) developing robust and efficient systems for (i) raising and (ii) deploying
resources; (b) improving the (i) quality and (ii) effectiveness of public expenditures in
achieving the Recipient’s social and economic policies; (c) supporting the introduction of
market orientation in public finance management; and (d) promoting (i) transparency and (ii)
accountability at all levels in the management of public finances”.
2.3 Restructured (as per amended grant agreement, section 2.01): “The objective of the
Project is to support Vietnam to strengthen its capacities for: (a) increased (i) coordination
and (ii) transparency in public finance management; (b) improved revenue mobilization; and
(c) (i) effective and (ii) efficient public expenditure management”.
2.4 Both the MDTF II PAD and the grant agreement refer to objectives (plural) which
suggest that “through” was intended to describe subobjectives and not component or
activities as is usually the case. This notion is further reinforced at project restructuring (five
subobjectives). Table 2.1 reorders and matches the subobjectives.
2.5 As per PPAR guidelines, intentions that appear evident in the original project
documents, and given the clarified PDOs in the restructured project, IEG management has
approved undertaking the evaluation based on the subobjectives. In practice, this leads to
three unchanged subobjectives (i, iv, and vi), one dropped from the original (deploying
resources covered by iii and iv), two modified (iii and vii), and one dropped at restructuring
(v).
Table 2.1. MDTF II Subobjectives
Original Restructured Comment
Develop capacities to strengthen its
public finance management system
through:
Strengthen capacities for: —
9
Raising resources Improved revenue
mobilization
Largely identical
Deploying resources — In practice subsumed within
quality and effectiveness of
public expenditures.
Quality of public expenditures Efficient public
expenditure management
Quality and efficiency not quite
the same but substantial overlap.
Effectiveness of public
expenditures
Effective public
expenditure management
Identical
Market orientation in public finance
management
— This was essentially about price
control. Dropped at restructuring.
Transparency at all levels in the
management of public finances
Transparency in public
finance management
Largely identical
Accountability at all levels in the
management of public finances
Increased coordination in
public finance
management
More modest after restructuring
Note: — = not applicable.
RELATED OPERATIONS
2.6 The objectives for PFMRP and MDTF II were linked to that of other noted operations
and have a bearing on strategic relevance. They are:
MTDF I: Provide technical assistance to support efforts to modernize the
management of public finances in six areas. The implementation completion
memorandum concludes that the project attained its objective.
PRSC First Series: Improving public expenditure management. According to IEG,
this objective was met.
PRSC Second Series: The relevant objective was “building institutions that can
support the country’s development strategy through improving governance.” The IEG
assessment of modest progress related to PFM7 was based on the following: “In the
policy area of planning no substantial progress was achieved in public investment
management and integration of modern planning in provinces. In PFM, in spite of
some achievements in external audit and introduction of a modern treasury
management system (a major contribution of PFMRP), the overall progress in PFM in
2007–2012 was below expectations. Specifically, the issues of off-budget
expenditures, conformity of the budget classification with international standards, and
lack of a major progress in internal audit remain major shortcomings.”
PIR: Support modern governance. Support to the stimulus package was an additional
objective. According to the IEG assessment, this project failed to achieve its main
objectives. A new public investment law was not adopted , macroeconomic stability
was not maintained, and the stimulus package was ineffective.
EMCC: Contribute to enhanced competitiveness to boost growth and poverty
reduction. The third and final operation in the series has not yet been approved. It is
noteworthy that some tax reform under EMCC 2 has been prepared with partial
contribution from MDTF II.
10
2.7 The objectives of the DPOs were set at a higher, more ambitious level than those for
the PFMRP and MTDFs. This has a bearing on how achievements of each are being or were
assessed. The full list of PFM-related measures is provided in appendix B, together with tax
reforms, which appear under the growth pillar of the PRSC but benefited from MDTF
support.
Design
PFMRP
2.8 The components were defined based on a clear diagnostic of the PAD. Their internal
sequencing, among subcomponents, was well thought through and considered the best among
PFM operations assessed by IEG during FY16. This reflected strong conceptual and
operational thinking and attention to detail with clear guidance on how to implement the
operation and to anticipate and deal with issues, which was not relegated to an operational
manual. . The components8 are:
Component 1: Strengthening Treasury and Budget Management
2.9 Component 1 involved primarily the implementation of TABMIS. It built on
substantial previous government investment in information and communication technology.
An international consulting firm designed the system based on international experience and
global best practice. Functional and technical specifications were closely aligned with the
World Bank and IMF Treasury Reference Model which was considered good practice at the
time and still remains relevant today (Hashim and Allan 2001). Subcomponents were:
Subcomponent 1 (a): Procurement assistance and Independent Bid Evaluation.
Subcomponent 1 (b): Independent Validation and Verification (IV&V). Assistance to
not only select its turnkey solution partner and negotiate a contract with them, but
also thereafter to verify and validate delivery against the milestones stipulated.
NB. At the government's discretion, the two areas of support above might have been
contracted directly to the international firm responsible for the TABMIS design
(competitively selected originally) in order to ensure continuity with earlier work.
While this option was not exercised, it reflected a forward-looking approach that tried
to reduce procurement constraints.
Subcomponent 1 (c): Training and change management. A "training of trainers"
approach would be used to deliver training to an estimated 14,000 trainees in the
State Treasury Department, Ministry of Finance, Ministry of Planning and
Investment, and provincial and district finance departments and line agencies.
Subcomponent 1 (d): Installation and configuration of TABMIS in the treasury head
office, MOF, MPI, and one pilot province.
Subcomponent 1 (e): Roll out to all treasury offices in provinces and districts.
Subcomponent 1 (f): Roll out to finance departments and planning departments at
provincial and district levels. At the completion of this subcomponent, the legacy
systems will be de-commissioned.
11
Subcomponent 1 (g): Pilot implementation in selected large spending units.
Subcomponent 1 (h): Government TABMIS implementation team.
Subcomponent 1 (i): Supplementary technical assistance with financial management
rationalization and reform. A major input will be to support the establishment of a
treasury single account (TSA). Similarly, the new system will support a gradual move
to accruals accounting.
NB. Recurrent operating costs. The originally estimated amount was US$3.2 million
annually.9
Component 2: Strengthening State Budget and Investment Planning
Subcomponent 2 (a): Assistance to MOF and MPI with preparation of a Medium-
Term Fiscal Framework (MTFF) and oversight of MTEF pilots. Funding provided for
a peripatetic rather than resident chief technical advisor (CTA) who will support
subcomponents 2 (b) and (c).
Subcomponent 2 (b): Assistance with preparation of MTEFs in four pilot sectors and
four pilot provinces. The sectors are (i) education and training, (ii) health, (iii)
transport, and (iv) agriculture.
Subcomponent 2 (c): Workshops to support establishment of medium-term budget
planning.
Subcomponent 2 (d): Design and implementation of a budget preparation system.
Component 3: Strengthening Management of Public Debt and Monitoring of SOE Fiscal
Risks
Subcomponent 3 (a): TA and capacity building to support strengthening of recording
and management of domestic debt.
Subcomponent 3 (b): Procurement of systems for recording, consolidation, and
management of public debt.
Subcomponent 3 (c): Monitoring of SOE fiscal risks. This subcomponent will not
address issues of SOE reform itself but will focus on the aggregate monitoring of the
basic SOE liabilities that may impact Vietnam’s fiscal situation.
Component 4: Project Management Support
2.10 The project was originally supported by an International Development Association
(IDA) credit of SDR39.9 million (US$54.3 million equivalent), including US$10 million
cofinanced by the U.K. Department for International Development (DFID). An additional
financing of SDR9.2 million (US$14 equivalent) was approved in 2011. It should be noted
that other reasons for the difference between total planned actual costs include fluctuations in
the U.S. dollar and SDR exchange rate as well as lack of information on actual recurrent
operating costs, funded by the government. Furthermore, while the original IDA credit was
fully disbursed, US$4.7 million of the additional financing was cancelled after closing. An
overview of planned and actual expenditures by component is provided in table 2.2.
12
Table 2.2. Project Cost Planned and Actual by Component and Financing Source
Component
Cost
(US$, million) Percentage
of
Planned Actual Planned
Strengthening treasury and budget management 46.97 77.94 165.9
Strengthening state budget and investment planning 3.80 3.13 82.4
Strengthening management of public debt and monitoring of SOE
fiscal risks
2.62 2.43 92.7
Project management support 2.70 4.22 156.3
Other (recurrent operating costs and contingencies) 15.36 0.00 "NA"
Total 71.45 87.72 122.8
By Financing Source
Borrower 7.14 8.10 113.4
DFID 9.99 10.46 104.7
IDA 54.33 69.15 127.3
Total 71.46 87.71 122.7
Note: DFID = U.K. Department for International Development; IDA = International Development Association; SOE = state-
owned enterprise.
N.B. The data in the "planned" column only reflects the original budget of the project, and is not updated with the additional
financing, exchange rate gain/loss and increasing counterpart funding of the Government. Update figures as reported by
Government are provided in appendix G.
MDTF II
2.11 Specifying details and the funding level for each component was not possible at
preparation. The grant was designed to be flexible and available to respond to the needs of
activities as they arise (demand-driven). Prioritization and strategic focus will be identified
by MOF in the annual implementation plans (IPs) based on the proposals submitted by
beneficiary departments and agencies. Furthermore, MOF intended to keep the single
strategy document (SSD) as an open document in the sense that it will allow for including
supplemental reform initiatives to be identified through future diagnostic studies. The project
originally consisted of the following parts (components):
Part I: Strengthening the recipient’s capacity in the implementation of selected
reforms and managing technical assistance programs.
Part II: Conducting analytical and diagnostic work in the seven key areas as specified
in the 2005 SSD (at time of appraisal 2006–2010 SSD) which included:
o Budget management: strengthening institutional framework, building capacity,
developing TABMIS as well as developing a medium- and long-term public
expenditure framework to meet the requirements of public financial management.
13
o Budget revenue management (taxation and customs): strengthening the tax
administration system and customs modernization to meet the requirements of
economic growth and intensive international economic integration.
o Debt management: strengthening the system for recording domestic and external
debt, and developing debt management and risk management systems.
o Financial market supervision and bond market development: establishment of a
financial service supervision agency and a road map for bond issuance and
development of a bond market.
o Corporate finance management: strengthening financial management capacity in
the government’s business activities to speed up the equitization process and
increase the efficient use of capital by state enterprises.
o Public assets management: strengthening the legal framework, strengthening the
capacity of the officials in charge of managing public assets, developing a better
system of monitoring public assets, and enhancing the examination and inspection
over the management and utilization of public assets.
o Price control: developing and improving the legal system for price control and
developing a professional price valuation system under the socialism-oriented
market economy in Vietnam.
2.12 The project-restructuring document does not formally present revised components or
subcomponents, even though this happened in practice. The Implementation Completion and
Results Report (ICR) notes that that components may be linked to the IPs, which as reflected
in the revised results framework of the restructuring paper (appendix D) are the following,
and comingle activities previously listed under Part I and Part II:
Increased coordination and transparency across the national PFM system through a
clear reform strategy, greater disclosure, improved oversight capacity, more secure IT
systems, and compliance with PFM legislation.
Improved revenue mobilization through equitable and efficient tax policies and
efficient customs administration.
Strengthened expenditure management through higher accounting standards and
improved capacity in financial reporting, cash management, and state asset
management.
2.13 Allocations to components and subcomponents were not adjusted in any of the project
documents, following the two main restructurings.10
2.14 The project was originally supported by a trust fund of US$5.12 million, which was
subsequently increased to US$7.2 million through additional financing provided by existing
and new donors.11 The following donors funded MDTF II: Australia, Canada, Denmark, the
European Commission, the Netherlands, and Switzerland. Canada, the European
Commission, the Netherlands, and Switzerland had undisbursed commitments at closing,
which were reimbursed. Neither the PAD and the restructuring document, nor the ICR
provide information on planned and actual cost by components. Instead, the ICR groups the
expenditures around 10 themes or subcomponents based on the IPs, Because of the lack of
other data, this approach is also adopted herein and presented in table 2.3.
14
Table 2.3. Project Cost Planned and Actual by Activity and Financing Source
Activity
Cost
(US$, millions)
Percentage
of
Planned Actual Planned
State budget expenditure management reform 0.85 0.87 102.4
State budget revenue management reform 1.53 1.11 72.5
Government debt management reform 0.15 0.11 73.3
Financial market 0.17 0.15 88.2
Public asset management reform 0.39 0.58 148.7
Price management reform 0.03 0.03 100.0
Corporate finance management 0.4 0.38 95.0
Support for PFM sector 1.23 1.27 103.3
Support for implementation of components 0.77 0.61 79.2
Project operational support 0.26 0.28 107.7
Total 5.78 5.39 93.3
By Financing Source
Borrower 0.37 0.28 75.7
Six development partners 5.41 5.1 94.3
Total 5.78 5.38 93.1
Implementation
PRINCIPLE CHANGES AND DATES
2.15 The key information for each project is summarized in table 2.4 below.
Table 2.4. Key Dates and Modifications
Area PFMRP MDTF 2
Key dates:
Approval
Effectiveness
MTR (planned)
05/22/2003
09/04/2003
12/11/2006 (11/30/2006)
04/01/2009
09/07/2009
08/15/2011 (07/31/2011)
Closing
Original
First extension
Second extension
Third extension
Closing DFID grant
02/28/2009
02/28/2011
02/28/2013
10/31/2013 (actual closing)
06/30/2011
06/30/2011
06/30/2012
12/31/2013 (actual closing)
Other changes or restructuring:
First
02/03/2011. Changes:
15
Second
Third
(i) Adjusting the scope of
several subcomponents.
(ii) Allocation of additional
financing, reallocation of funds,
new disbursement category
(consultants’ services, training
and workshops), and changes to
percentage of financing.
02/26/2013. Changes:
(i) Revising project activities
and their associated output
indicators.
(ii) Reallocating proceeds.
09/19/2013. Changes:
(i) Remove selected activities
which are no longer appropriate
technically or feasible within
timeframe.
(ii) Revise a number of sector
and output indicators.
01/06/2011. Following
changes:
(i) Additional financing: The
Swiss State Secretariat for
Economic Affairs joined the
trust fund.
(ii) Revision: Reallocation.
25/06/2012. Change in:
(i) PDO.
(ii) Project financing. Due to
slow progress, donors were
unable to disburse all
committed amounts. The
Netherlands exited at the mid-
term review.
Source: Project documents. Note: The DFID grant was extended a third time but the relevant document does not appear to have been filed. NA = not available.
GENERAL
2.16 The implementation context has been discussed in chapter 1 and the key changes to
the projects are listed above. It should be noted that both operations suffered from delays,
due in part to the fact that the initial steps involving either launch of complicated
procurement or preparation of a demand-driven sound implementation plan took longer than
expected, but not unreasonably so. Additional implementation factors pertaining to each
operation are discussed below.
2.17 In the case of PFMRP, various factors, most listed in the ICR and verified by the IEG
mission through interviews, affected implementation. The TABMIS experience was
reviewed as a case study and is summarized further below. With the benefit of hindsight, the
mid-term review (MTR) in 2006 took place was unable to identify all the issues affecting the
project as some were not apparent due to slow and limited implementation. The additional
financing provided an opportunity to assess and accelerate progress, which appears to have
been taken.
2.18 The interest and participation of various ministries in the MTEF pilot were uneven.
Issues included lack of ownership and this task not being perceived as a core responsibility,
key expected reforms needed for MTEF rollout were delayed, and the budget preparation
subcomponent was dropped in order to simplify the project and focus on TABMIS (events
proved this decision to be the correct). The main issue hindering the implementation of the
Debt Monitoring and Financial Analysis System (DMFAS) was time taken for World Bank
to approve deviations from standard contracts.
16
2.19 The implementation of PFMRP was based on two implementation plans (IP 1 and 2)
agreed to in March 2010 and June 2011. Their preparation process proved quite lengthy. The
MTR that took place in 2011 triggered additional financing by donors (as anticipated in the
PAD) as well as project restructuring a year later.
2.20 Factors that affected implementation included the need to enhance MOF’s capacity to
manage a complicated TA program with many beneficiaries and activities.12 The transition to
the new Financial Development Strategy (FDS) and ensuring the alignment of subprojects to
it was another source of delay, as was insufficiently clear criteria for screening subprojects.
TABMIS IMPLEMENTATION EXPERIENCE
2.21 The TABMIS experience is given special prominence here as it accounted for the
majority of the funding under PFMRP and is a major contributor to improvements in PFM. In
the early 2000s, the government of Vietnam’s Financial Management Information Systems
were fragmented and had overlapping and conflicting functionality. Little attention was paid
to critical flows of information between system components and beyond the system. The
result was lack of integrity in overall fiscal data, transparency and control. The problems
could be traced to weaknesses at two levels: (i) institutional weaknesses, notably lack of a
common accounting standard and of consolidated budget; and (ii) technological weaknesses.
2.22 The acquisition of TABMIS was based on:
A turn-key contract covering: (a) The procurement of a new TABMIS; (b)
installation and configuration of TABMIS in Treasury head office, MOF, MPI and
one pilot province; (c) roll out to all Treasury offices in provinces and districts and to
Finance Departments and planning departments at provincial and district levels; and
(d) Pilot implementation in selected large spending units.
Technical assistance for: (a) procurement assistance and Independent Bid Evaluation;
(b) IV&V; and (c) training and change management.
Supplementary technical assistance with financial management rationalization and
reform.
Implementation complemented by: (a) a government TABMIS implementation team;
and (b) payment by government of recurrent operating costs.
2.23 In 2005, IBM Singapore was awarded the contract for implementing TABMIS after a
Bank “no objection letter” was issued on in June 23 2005. The contract covered all
implementation activities envisaged after two-stage international competitive bidding (ICB)
based on tender documents and technical specifications prepared by a consultant. The
contractor proposed Oracle EBS as the application software to be used as a basis for
TABMIS implementation.
2.24 The design parameters for the systems ensured that (i) the scope of the
implementation would be restricted to the modules to cater to Core Budget Execution
Processes, and processing of payments and receipts transactions; (ii) a Treasury Centric
System would first be implemented and then decentralized to spending units as necessary;
(iii) initially budget preparation will be undertaken outside the system or by another system,
with in year budget transactions entered in the TABMIS system; (iv) Budget Department,
17
Treasury, and Line Ministries would use the same system to process their transactions and
would share databases; (v) transactions should be captured in real time as they occur; and (vi)
the TABMIS databases should be treated as the primary source for financial reporting within
government; there should be no second set of books.
2.25 Design parameters and sequencing conformed to the Bank’s experience in
implementing such projects. Systems procurement was carried out through a competitive two
stage ICB process based on well-prepared detailed technical specifications that described the
scope of the system in terms of the functional processes that would be covered and the
agencies where the systems would be installed.
2.26 The two main contracting assignments that were involved in project implementation
were a diagnostic and design consultancy and a contract for actual system implementation.
The design of the main consultancy package proved to be a significant bottleneck for systems
implementation in Vietnam. It was split into various contracts with the same consultant.
However, the consultancy for the supervision/implementation phase was called an IV&V
consultancy. The consultants misread the purpose of the hiring and saw it as an audit type of
exercise where they were to critique the initial design and the implementation work, instead
of actually helping the government to ensure that the contractor implements the system in
accordance with the design that had been specified and approved earlier. The government
finally terminated the contract and was left with limited support in the contract management
and for supervising implementation. This resulted in a situation that the government had to
rely exclusively on the implementing contractor advice during this phase.
2.27 TABMIS in Vietnam came into operation in phases over the period 2010–2011. It is
now operating in stable mode. It is a mission critical system and is the backbone of the
government of Vietnam’s financial operations. The system serves as a common platform to
all treasury offices and financial agencies at all four levels of the government for budget
allocation and control, payment and receipt processing, expenditure and revenue accounting
and reporting.
2013 PEFA
2.28 The PEFA issued in 2013 was funded by the MDTF II (Government of Vietnam
2013). Its measurement of various performance indicators is shown in table 2.5.
2.29 The PEFA is based on 2011–2012 data. It does not capture the project’s main
contributions, which were back-loaded toward 2012–2013 and only fully visible since 2015.
Nevertheless, the PEFA is an important exercise as captures some of the implementation
challenges faced by the two projects. The fact that this highly critical report was made public
is an important step toward fiscal transparency. Furthermore, if repeated in 2019 as
apparently planned, it will provide a useful baseline to assess achievements under the two
operations and confirm the findings of this assessment concerning efficacy and outcome.
2.30 Only 12 out of 31 indicators were rated B or better (only one was rated A). This result
was below that of most comparators and was an indication of the challenges ahead. The
report nevertheless notes reasons to expect progress in several areas. For example, TABMIS,
which was not fully operational at the time, is highlighted as a positive factor13 (e.g., in
limiting future contingent liabilities). The planned review of budget law is also seen as an
important step forward, now completed with support provided under MDTF II. The PEFA
18
assessment concludes by listing other areas where further policy actions are needed, most of
which were covered by one or both projects. They include the medium-term fiscal and
expenditure framework; tax management; public debt management; public asset
management; public procurement; and auditing.
Table 2.5 PEFA Performance Measurement 2013
PEFA Dimension Score
A. Credibility of the Budget Score
PI-1 Aggregate expenditure out-turn compared to original approved budget C
PI-2 Composition of expenditure out-turn to original approved budget D+
PI-3 Aggregate revenue out-turn compared to original approved budget D
PI-4 Stock and monitoring of expenditure payment arrears NR
B. Comprehensiveness and Transparency Score
PI-5 Classification of the budget D
PI-6 Comprehensiveness of information included in budget documentation B
PI-7 Extent of unreported government operations C+
PI-8 Transparency of Inter-Governmental Fiscal Relations B+
PI-9 Oversight of aggregate fiscal risk from other public sector entities C+
PI-10 Public Access to key fiscal information B
C. Budget Cycle
C (i) Policy-Based Budgeting Score
PI-11 Orderliness and participation in the annual budget process B
PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting C
C (ii) Predictability and Control in Budget Execution Score
PI-13 Transparency of taxpayer obligations and liabilities C+
PI-14 Effectiveness of measures for taxpayer registration and tax assessment C+
PI-15 Effectiveness in collection of tax payments C+
PI-16 Predictability in the availability of funds for commitment of expenditures B+
PI-17 Recording and management of cash balances, debt and guarantees B
PI-18 Effectiveness of payroll controls B
PI-19 Competition, and appealing mechanism in procurement C+
PI-20 Effectiveness of internal controls for non-salary expenditure D+
PI-21 Effectiveness of internal audit D+
C (iii) Accounting, Recording and Reporting Score
PI-22 Timeliness and regularity of accounts reconciliation B+
19
PI-23 Availability of information on resources received by service delivery units A
PI-24 Quality and timeliness of in-year budget reports D+
PI-25 Quality and timeliness of annual financial statements D+
C (iv) External Scrutiny and Audit Score
PI-26 Scope, nature and follow-up of external audit C+
PI-27 Legislative scrutiny of the annual budget law B+
PI-28 Legislative scrutiny of external audit reports B+
D. Donor Indicators Score
D-1 Predictability of Direct Budget Support D+
D-2 Donor information for budgeting and reporting on project/program aid B
D-3 Proportion of aid managed by national procedures C
Source: PEFA 2013
FIDUCIARY ISSUES AND SAFEGUARDS
2.31 Given the similarity in both projects’ experience, the fiduciary and safeguards issues
are treated together. Neither project triggered any social issues or safeguards. MDTF II risk
was rated as modest with respect to both procurement and financial management, on the
assumption that the Project Management Unit (PMU) would be adequately staffed.
Procurement risks were identified in the PFMRP PAD and mitigated through actions such as
hiring a specialist and training (World Bank 2010). While project financial management risks
were considered low, issues at country level were considered more significant. Risk
mitigation included appropriate staffing of the PMU. The minor difference in risk perception
of the two project is explained by the latter’s greater complexity, including a challenging
TABMIS procurement, and the fact that national systems improved over time and became
less risky.
2.32 An unusual but quite appropriate provision under PFMRP at time of appraisal is that
the Bank agreed to the sole-source extension of a key contract (also discussed under quality
at entry). Even though the contract was eventually retendered and awarded to the same firm,
this feature is noteworthy.
2.33 Neither the Implementation Status and Results Reports (ISRs) nor the ICRs describe
any issues with fiduciary compliance, and this was confirmed during the field visit. The only
issue noted was in the MTDF II ICR—difficulty in finding qualified local experts, even
though interviews with the beneficiary department suggest this was not seen as a binding
constraint. The PFMRP ICR states that initial problems early on did not persist. Both projects
submitted all audits on time, and these were unqualified.
2.34 The review of fiduciary arrangements raises two issues concerning their efficiency.
First, even though the MDTF II PAD recognized that full-time fiduciary staff would not be
needed, it required such staffing at the PMU. This review could not establish why this
capacity could not be shared with the PFMRP PMU (both at MOF), even if two PMUs were
needed to manage the substance of each operation. Second, the low procurement thresholds
20
(for example in the case of consultants US$100,000 for firms and US$50,000 for individuals)
may have been typical in the early 2000s. However, it is unclear why these thresholds were
not increased over time and why the same levels were kept for the MDTF II project. All
terms of reference for consultants are subject to prior review by the World Bank, which is a
good way to add value and bring knowledge to bear on individual activities. However, low
thresholds would have taken away supervision resources from substantial implementation
support, with questionable benefits.
2.35 Finally, the difficulties under PFMRP in contracting with the United Nations
Conference on Trade and Development (UNCTAD) are discussed under Bank performance.
What is worth repeating is that the process for obtaining the procurement waver was time
consuming and inefficient.
Relevance of Objectives
2.36 Both operations supported the same government and Bank objectives, complemented
each other, and were implemented during overlapping periods. MDTF II did not overlap with
the first years of PFMRP, but both operations closed during the last quarter of 2013.
Notwithstanding the differences in their PDO statements (in the case of MDTF II both pre-
and post-restructuring and needlessly complicated), they shared the same strategic relevance.
2.37 PFM reforms were given prominence in both overall development strategies of
Vietnam as well as in specific ones. In terms of overall government strategies:
The 2002–2005 Poverty Reduction and Growth Strategy supported three themes, one
of which concerned the adoption of a modern public administration, legal, and
governance system.
The Socio-Economic Development Plan (SEDP) 2006–2010 set out four broad
objectives, including improve governance. As further developed in the 2007 Vietnam
Development Report (VDR), PFM reform was a substantial part of this theme.
2.38 The operations were also supported by specific strategies adopted by government,
including:
Public financial management was central to the government's Administration Reform
Master Program for the period 2001–2010, endorsed by the prime minister in
September 2001.
The Public Administration Reform Master Plan for the period 2001 to 2010 stated
that treasury management (the basis for TABMIS) will remain a central government
function, and this was clearly stated in the new state budget law.
In 2004, the prime minister approved Decision 211 to guide the country's PFM
development, focusing on the broad strategic areas of resource mobilization, budget
management (preparation and execution), debt management, and public
administration reform.
To operationalize these umbrella plans, the Minister of Finance approved the 2007
SSD, which outlined seven key reform areas. The seven subcomponents of the MDTF
II project were directly mapped to these reform areas. It should be noted that some
21
development partners felt that the SSD lacked sufficient sequencing, which
contributed to the MDTF II’s slow start.
A new 2010–2015 FDS was adopted to replace the SSD. This strategy paved the way
for bringing to fruition policy and institutional actions started under both projects,
especially MDTF II.
2.39 From the standpoint of development partners, PFM reforms appeared to be a very
important element of the overall reform agenda in Vietnam, which accounted to a substantial
amount of their financial programming, especially once DPOs described in chapter 1 are
taken into account. This importance is further reflected by the fact that throughout the period
under review, the bulk of this support was fully harmonized and provided through the
cofinancing of World Bank managed operations as well as harmonized dialogue, mainly
through the PRSC and coordinated policy dialogue under EMCC.
2.40 All relevant Bank strategies were fully aligned with government strategies and
priorities. PFM reforms were this given high prominence in all country assistance strategies
(CASs) since 2002, including the current country partnership strategy (CPS) approved as
both projects closed. More specifically:
The FY03–06 CAS third goal of promoting good governance was supported by
improving public financial management, information, and transparency. Indirect but
important contributions were made to achieving other governance subgoals, including
public administration reform. The CAS identified four risks, one of which was failure
to address governance issues. The PFMPR and PRSC operations launched at this time
aimed to minimize this risk from the PFM standpoint.
In line with the SEDP, the FY07–11 CPS maintains improving governance as a pillar.
It considers continued PFM reforms as essential to improving governance and to
strengthening key government systems.
The FY12–16 CPS focuses on improving competitiveness. More specifically, it
supports measures to strengthen CPS Outcome 1.1: Improved Economic Management
and Business Environment. This includes reforms to strengthen Vietnam’s
macroeconomic policy framework and PFM. The CPS further notes that
implementation risks would be partially mitigated by capacity building for PFM.
The two operations under review are explicitly mentioned as lending Bank
instruments in all three strategies.
2.41 High prominence has been given during the past decade and half by government,
development partners, and the Bank to governance reforms, of which PFM constitutes a
significant part of financial support. The objectives of both operations, which complemented
others, notably large DPOs, were fully aligned with this priority and covered goals that were
attainable and realistic, and yet sufficiently ambitious. These objectives might have
benefitted from being restated. In the case of MTDF II, there were too many, and they could
have been clustered. As for PFMRP, as was done for the PFM operation in the Russian
Federation, the objective might have been specified in the form of putting in place
functioning information systems, including a TABMIS with adequate coverage of
expenditures. Despite this minor shortcoming, strategic relevance for both projects is rated
high.
22
Relevance of Design
PFMPR
2.42 The PFMRP was appropriately focused on three clear priority areas, with other
important areas related to PFM, public expenditure management, and external debt
management, which were supported through other operations or advisory services provided
by the Bank and other donor agencies (World Bank 2003a, 17–18). The project’s
components and subcomponents were well related to the objectives and were sequenced well,
one subcomponent often reinforcing the other. Their design addressed the key institutional
and technological challenges, in light of the available lessons from the international
experience.
2.43 The choice of lending instrument (a single, technical assistance project) was also
reasonable. The alternative of breaking down the financing into two or more tranches (as in
the case of adaptable program lending, which had been the chosen instrument in some cases
such as Russia) had been considered during the preparatory phase. However, in the case of
Vietnam, the choice was made of procuring TABMIS under a large, turnkey contract
covering all hardware, software, and implementation services. This approach addressed
concerns over weak contract management and technical expertise available within the
government to oversee separate contracts for these components, and reduced uncertain over
availability of future financing. Under this approach, breaking down the financing into two or
more phases would have been impractical and inefficient. In practice, when additional
resources were needed to fill a financing gap, they were provided through IDA’s additional
financing.
2.44 The results framework for this project was limited to the results matrix in appendix D
of the PAD, which reflected the standard logframe approach in use at the World Bank at the
time of the project’s appraisal. One of the general weaknesses of this approach, which is no
longer used by the World Bank, was the lack of explicit discussion about how project outputs
would translate into the postulated intermediate and final outcomes and these into the
project’s specific objectives. Moreover, two of the key associated outcomes proposed by the
PAD for this project, that is, “better planning” and “fiscal sustainability” were not specific,
but were clearly related to debt management and MTEF, which were project activities. The
logframe also included higher level objectives (promoting good governance and
strengthening PFM information and transparency). The latter could have also been set as a
project objective, and both were closely related to PDOs. The higher level indicators were
also relevant.
2.45 Overall, the logical chain from outputs to intermediate outcomes and to specific
objectives or their key associated outcomes that was implicit in the project’s results matrix
was broadly plausible. There was a similar close relationship between subcomponents,
components, and PDOs. The relevance of design is therefore rated substantial.
MDTF II
2.46 The MDTF II design has to be seen in the context of the overall PFM program it was
supporting. As mentioned earlier, the main policy actions were supported by DPOs and to
some extent PFMRP, which also funded major investment in technology infrastructure.
23
However, the MOF needed resources to undertake strategic studies and capacity building on
PFM-related activities. The small flexible, demand-driven TA project was thus the right
instrument that complemented the others.
2.47 The MDTF was intended to support the implementation of the SSD. At approval, it
consisted of two parts (components), one designed to build capacity and the other to conduct
analytical and diagnostic work. The second component specified seven thematic themes
(subcomponents) fully aligned with the SSD (implicitly the first component would also cover
the same themes). Even though the link between the components and the higher level
objective seemed quite clear, an unnecessary complication was introduced by a complicated
PDO statement, each element of which nevertheless could be associated with one of the
components. Project restructuring streamlined both PDOs (which remain somewhat
elaborate) and components were simplified. Subcomponents were altered and redefined as
components, and capacity building and studies were folded into each. Furthermore, the
components were based on IP 1 and 2, which can be thought of as inputs to the intermediate
outcomes in the chain of logic.
2.48 The original design struggled with how to establish indicators to measure project
outcome when activities were not known. Higher level ones from hypothetical PEFAs were
considered, but ultimately the PAD included tentative results linked to the SSD themes.
These were still set at too high level. The PAD also noted that these indicators would be
revised once the IPs would be known. Following project restructuring, the project redefined
results that were based on the expected outcomes of IPs.
2.49 The chain of logic had weaknesses that were not fully addressed at restructuring.
Nevertheless, the choice of instrument was appropriate, and there were credible relationships
between PDOs, components and activities, and results, given the demand-driven nature of the
operation. The relevance of design is therefore rated substantial.
3. Achievement of the Objectives
PFMRP
3.1 PFMRP’s PDOs were to: “to strengthen the Borrower’s capacity to (i) plan, (ii)
execute and (iii) report on its budget, and to improve the (iv) transparency and (v)
accountability of the budgetary systems and processes.” It should be noted that this
assessment considers that the objectives of “strengthening” and “improving” various aspects
of PFM clearly reflected the understanding that PFM reforms are part of a long-term process
that would for instance be measured through PEFA indicators being rated “A” or “B.” The
operation’s ambition was thus to make satisfactory advances toward that goal, and efficacy is
judged here on that basis as well as on the basis of results outlined in the PAD or from other
sources but attributable to the project.
Centrality of TABMIS as Contributor to Objectives
3.2 The second to fifth PDOs all rely on the functionalities of the TABMIS and how it
operates in practice. To avoid repetition, a consolidated discussion of the TABMIS is
presented, with additional results reported for each later. An assessment of TABMIS
functionality was carried out separately and is detailed in appendix C.14 The main
24
conclusions, which were validated by the IEG during and after its mission, are summarized
below.
3.3 The following features determine the effectiveness of the TABMIS as a budget
management tool:
Enabling environment. This includes the status of the TSA and an evaluation of the
degree of consolidation of government cash balances in a TSA.
FMIS coverage. This includes an evaluation of the coverage of government financial
transactions.
Core system functionality. This includes functionality related to budget management;
commitment management; payments management and associated controls; payroll
related payments; debt service payments; fiscal transfers and subsidies; evaluation of
the comprehensiveness and timeliness of tax and nontax receipts posted in FMIS; the
nature of the banking interface; quality of fiscal reporting; basis of accounting; and
use of advanced budgeting features.
Noncore functionality. This includes use of other systems modules and interfaces
with other systems, for example, budget preparation; MTEF capability; establishment
control and its integration with payroll payments; debt management; fixed assets; and
auditing.
Some technical aspects. Nature of information systems support for budget execution
and treasury processes; systems architecture; and use of a data warehouse and
analytical tools.
3.4 The main findings are the following:
Around 85–90 percent of the total government resources are banked in the TSA or
TSA-linked arrangements. This level of coverage is considered high.
It is estimated that around 85–90 percent of the total government resources are
processed through the TABMIS. The main exception is that transactions against
donor funds (other than grants) are not processed through the TABMIS. This level of
coverage is also considered high.
TABMIS has the core functionality required for effective budget execution and
incorporates key controls that are applied in ex-ante mode. Considering its coverage,
transactions related to 85–90 percent of the government financial resources are
subjected to controls prior to payment.
TABMIS focuses on core budget management functionality and does not include
ancillary functions. While these may need to be developed in due course, the current
state of affairs reflects acceptable sequencing.
3.5 Based on the above considerations, this report concludes that that TABMIS is a well-
performing tool for effective budget management for the government of Vietnam. Its scope
covers 85–90 percent of the financial resources available to the government. Its geographic
coverage extends across the country and across all four levels of government. The system
functionality implemented includes effective ex-ante budget control for government financial
resources and commitment control above specified thresholds. Systems functionality covers
core budget execution processes. Some 10,000 treasury and finance officials use it for the
25
government’s day-to-day financial operations. The successful TABMIS implementation is
taken into account in the ratings of the various objectives it affects (2–5).
Cross-Cutting Theme
3.6 All five objectives are defined in terms of capacity building. Some of this occurs
through the various systems being put in place. However, the training provided to
government staff, notably MOF, is also quite important. There is no systematic assessment of
whether the training provided resulted in improved functionality, even though all officials
interviewed, many of whom had directly or indirectly participated in the project, stated the
various activities had been very useful. The second issue, also taken up under sustainability
below, was whether trained civil servants had remained within government in a position
where they could use the training. In the absence of a tracer study, the IEG mission asked
about this in every meeting. The consensus response was that almost no one had left MOF
positions, except a minority who had retired. Bank staff also confirmed this. In view of this,
one can consider capacity-building efforts to have been successful.
OBJECTIVE 1: STRENGTHEN THE BORROWER’S CAPACITY TO PLAN ITS BUDGET:
SUBSTANTIAL
3.7 This objective was largely aligned with the second project component, to which most
relevant results are attributable.
Output
3.8 The following principle indicators were included in the logframe (indicators such as
workshops are not reported here as were lower level and, as indicated in the additional
financing documents, the targets were surpassed):
Budget planning module of TABMIS tested and implemented.
o This was part of TABMIS’s ancillary functions that were dropped during the
design and implementation phase to focus on core functions. Instead, the
MOF operates a separate Excel-based budget preparation system. Budget
figures from this system are loaded by the MOF and budget controllers into
TABMIS at the start of the year. The IEG mission reviewed the system’s
functionality and concluded it was adequate. The indicator is considered as
having been met.
A five-year MTFF was prepared as part of the 2005 budget cycle, and rolled over,
updated and published as part of each subsequent budget cycle.
MTEFs were successfully piloted in two sectors and two provinces as part of the 2005
budget cycle, and rolled over and updated in the first two sectors and provinces. In
addition, they were piloted in a further two sectors and provinces as part of 2006
budget cycle, and rolled over, updated, and published, in all four sectors and all four
provinces in subsequent years.
These two intermediate indicators were subsequently revised in the additional
financing. As follows, three-year MTFFs and MTEFs were piloted as part of the
26
budget cycle in four sectors and four provinces; and rolled over, updated, and
published as part of each subsequent budget cycle.
o The project successfully piloted the application of MTFF and MTEF in four
line ministries (education and training, health, transport and agriculture) and
three provinces (Binh Duong, Vinh Long, and Hanoi City) for three budget
year cycles. The scope of the MTFF was a bit narrower than in the original
indicator15, there were three provinces instead of four, and the exercise was
delayed. However, the revised indicator was achieved. Nevertheless, keeping
in mind that the objective of the exercise was to demonstrate the feasibility of
pilots, for future generalization, the indicator is considered as having been
met.
Outcome
3.9 The PAD indicator was “better planning of the State Budget and the Public
Investment Program to achieve the growth and poverty reduction goals set out in the SEDP.”
Specific measurements were not proposed, and this review draws from its mission and other
sources. The relevant PEFA indicator is PI-12, rated “C.” The PEFA notes that the lack of
overall budget constraint was a key shortcoming. However, a new budget law was approved
in 2015. According to the World Bank staff’s assessment, it is of good quality and addresses
most of the shortcomings of the previous law. The revised State Budget Law promulgates the
preparation of the five-year financial plan and the 3-year financial-budgetary plan. Guiding
decree on MTEF is being developed and will be passed during 2016. There is also a separate
medium-term investment plan, which was issued in 2015. Most of sectoral strategies are for
10 years and sectoral plans are for 5 years. These were issued, following the latest social-
economic development strategy and plan.
3.10 It mandates the use of MTFF and MTEF in budget planning. This law was a prior
action under EMCC and benefitted from technical assistance from MDTF II. Therefore, the
main question asked here is whether there is also attribution to PFMPR. The IEG mission
was satisfied that, without the successful piloting of these frameworks, the budget law is
unlikely to have supported their generalization. Attribution therefore exists. Furthermore,
these pilots have improved collaboration between MOF and MPI, which in the face of
continued segmentation of responsibilities between the recurrent and investment budget, will
be essential.
3.11 Based on analysis, the objective may be considered as having been attained.
Other Objectives
3.12 Before discussing the four remaining objectives, it should be noted that their analysis
was hampered by lack of useful outcome indicators. Project documents fail to propose a clear
indicator for transparency, while an outcome indicator covers this and other PDOs without
proposing a quantifiable measure other than it should be “in compliance with best practice”
which reflects a level of ambition more aligned with a longer term goal and higher level
objectives. This review therefore largely relies on its own analysis and interviews from the
field visit and various reliable public sources.
27
OBJECTIVE 2: STRENGTHEN THE BORROWER’S CAPACITY TO EXECUTE ITS BUDGET:
SUBSTANTIAL
3.13 The ICR argues “the TABMIS business processes aligned with the World Bank
Treasury Reference Model together with a unified chart of accounts aligned with GFS and
TABMIS itself helped to establish an orderly and transparent budget execution process with
strict control throughout four levels of government.” IEG’s own assessment is in agreement
with this, also considering the importance of expenditure control mechanisms and of the
reliability and timeliness of the information that is entered into TABMIS.
3.14 Furthermore, according to PEFA, “the majority of revenues and expenditures of the
State are captured in the budget. However, there are some elements of revenue and
expenditure that are treated as off-budget, even though they are still budgeted, reported,
disclosed, and audited annually.” The relevant PEFA indicator PI-7 is rated “C+.” This
indicator is expected to improve. A large portion of off-budget expenditure originates from
the social security and health insurance funds, which accounted for 5 percent of total budget.
According to the revised state budget law, to enhance fiscal transparency, expenditure from
these extra budgetary funds will have to be disclosed in the budget.
OBJECTIVE 3: STRENGTHEN THE BORROWER’S CAPACITY TO REPORT ON ITS BUDGET:
SUBSTANTIAL
3.15 There is strong evidence from PEFA and a review of TABMIS functionality that the
government can report on its budget in real time. Similarly, the development of DMFAS
enables the regular monitoring and reporting of domestic and external debt. DMFAS key
staff have been trained and remain in place (thus achieving intermediate outcome in revised
indicators). Debt sustainability is analyzed periodically in collaboration with the IMF and
World Bank and published soon thereafter.
3.16 The government has the capacity to report internally on its budget, which implies the
objective has been met. This review considers its actual publishing and disclosure to the
public to be covered under the next objective.
OBJECTIVE 4: STRENGTHEN THE BORROWER’S CAPACITY TO IMPROVE THE
TRANSPARENCY OF THE BUDGETARY SYSTEMS AND PROCESSES: SUBSTANTIAL
3.17 The Fiscal Transparency Report published by the U.S State Department (2015)
classifies Vietnam among the countries that have met its minimum standards for fiscal
transparency. In contrast, its 2012 report classified the country among those that did not. The
World Bank’s fiscal transparency review of Vietnam also comes to a similar conclusion but
notes areas for improvement (Allan and Rab 2014).
Increased public availability of fiscal information in Vietnam in recent years is
matched by strong interest and demand among stakeholders. The Ministry of Finance
is rated highly in terms of its progress in communicating fiscal information.
The budget transparency survey also indicates much scope to improve official budget
documents.
Although the media is the key channel for communicating fiscal information to the
markets, they themselves have difficulty in interpreting primary budget reports. Civil
28
society organizations play an important role in promoting budget literacy and
transparency particularly at the subnational level.
But general access to and awareness of budget issues at the subnational level remains
poor, in part because disclosing only financial information may not provide
meaningful information to ordinary citizens.
3.18 The assessments reflect an improved situation, consistent with project objectives
being met. Additional information pertaining to budget transparency is also provided in box
9.1 below. Furthermore, PI-10, the relevant PEFA indicator, was “B” reflecting relative
strong performance in this area. However, the issue of attribution needs to be examined. The
review also identified TABMIS, TSA, and the chart of accounts (COA) as drivers of, or
contributors to, these improvements. There is also expectation than the new approved budget
law will improve matters further.16 The analysis is consistent with progress toward the
objective with credible attribution to the results to support under the project, notably
TABMIS.
OBJECTIVE 5: STRENGTHEN THE BORROWER’S CAPACITY TO IMPROVE THE
ACCOUNTABILITY OF THE BUDGETARY SYSTEMS AND PROCESSES: SUBSTANTIAL
3.19 The strengthening of PFM systems (TABMIS, COA, and DMFAS) has resulted in
improvements in the accountability of budgetary systems and processes. An important issue
in assessing PDOs is whether the information in turn feeds into the accountability institutions
(State Audit of Vietnam and National Assembly), which even though they were not
beneficiaries under the project are part of the accountability systems, broadly defined.
According to the PEFA, this flow of information and subsequent follow-up happens
satisfactorily: “The State Audit Agency carries out a range of different types of audit —
financial, compliance and performance—and works to international standards. But its
resources only enable it to cover fully each year about 60 percent of central government units
and 50 percent of provinces. Reports are submitted to the National Assembly without delay,
and there are effective arrangements for follow-up” (Government of Vietnam 2013, vii).
3.20 The conclusion of this review is that all objectives have been met. This has been
primarily through project achievements during its last two years of implementation,
especially once TABMIS became operational, as well as sustainability of capacity building
efforts during the project life. The project also appears to have contributed to the higher level
objective of improved governance, as reflected in the key performance indicators. However,
available information also suggests most such indicators have been partially met, and
continued policy and institutional actions will still be required.
MDTF II
3.21 MDTF PDOs as evaluated here are “to support Vietnam to strengthen its capacities
for: (a) increased (i) coordination and (ii) transparency in public finance management; (b)
improved revenue mobilization; and (c) (i) effective and (ii) efficient public expenditure
management.”
29
POLICY ACTIONS UNDERTAKEN SINCE PROJECT CLOSING
3.22 There is an important difference between the outcomes attributable to the project at
closing and at present. The main factor is that the project was fully or partially responsible
for preparing an impressive list of policy actions that were ready in draft but not yet approved
by decision makers, adopted formally, or implemented. Experience in other countries has
shown that such policies may remain in draft form for a long time before some are finalized.
Indeed Vietnam’s track record in this area had been mixed in recent years, as evidenced by
the number of triggers under DPO series that were dropped or modified in a way that made
them less impactful. However, the IEG mission noted that not only had this risk not
materialized, but also an impressive number of policy actions had been brought forward by
MOF and adopted by the appropriate decision-making entity (National Assembly, prime
minister’s office, or others). As noted elsewhere, this favorable outcome (favorably
comparable to achievements under large DPOs) reflects the high degree of proactive
commitment by MOF staff and its decision makers and the effectiveness of capacity building
under the project (as well as in some cases additional leverage provided by the last operation
in the EMCC series). It also underpins a case whereby the project outperformed its goals.
CROSS-CUTTING THEME
3.23 All five objectives are defined in terms of capacity building. This occurred in a
number of ways under the project. The project was apparently quite successful in attracting
highly qualified international consultants who were supported by strong local consultants.
These teams worked closely with MOF staff from various departments and imparted their
tacit knowledge to them, for example, with respect to the development of bond markets. This
type of capacity building occurred for instance while drafting laws and regulations, through
the development of specific manuals, formal training, and study tours. In case of training and
study tours, the conclusion made under PFMRP, whereby MOF staff tended to remain in the
ministry, is also valid here. As noted under M&E, in a minority of cases, the beneficiaries of
training programs were tested on their acquired knowledge, and the best performers were
eligible for various recognitions and rewards. In this case also, officials interviewed stated
the various activities had been very useful and that almost no one had left MOF positions. In
view of this, one can consider this aspect of capacity building efforts to have been successful.
CONTRIBUTION OF PROJECT RESULTS TO OBJECTIVES
3.24 Many of the results achieved by the project affect one or more objectives. To avoid
repetition, the mapping between the key results and objectives is provided in table 3.1.
Additional details are provided under the analysis of various objectives.
30
Table 3.1. Mapping of Legal and Regulatory Achievement to MDTF II PDOs
Result
Co
ord
inatio
n
Tra
nsp
are
ncy
Rev
enu
e
Effectiv
eness
Efficien
cy
PEFA report was used extensively to inform new government policy including the
recent issuance of the revised state budget law in 2015, which among other things,
(i) builds a robust fiscal policy framework with the medium-term fiscal
framework that aligns revenue and expenditure with the development objective;
(ii) increases fiscal transparency by disclosing the executive budget proposal to
the public when it is submitted to the National Assembly; and (iii) aligns recurrent
budget classification with capital budget classification.
X X X X X
PEFA report served as the baseline result framework to monitor the PFM
analytical and advisory assistance TA provided to the government during 2015–
2020.
X
The medium-term action plan 2015–2017 (for PFM strategy) was issued by the
MOF Decision 704/QD-BTC dated 17 April 2015, which comprised 8 pillars and
45 activities to be implemented during 2015–2017; 36 of 42 activities were
completed in 2015. One activity was adjusted and one more activity was added to
the action plan. Some results are highlighted below.
X X X X X
Pillar on revenue mobilization: the government has already made progress on
several tax policy and tax administration including increasing tax revenue from
domestic market and collection of tax arrears.
X X
Pillar on the tax and custom administrative procedure reform has been progressing
very well. The government recently issued resolution 19 to shorten substantially
the tax compliance time.
X X
Pillar on public debt management was being consciously managed by MOF.
Although public debt has been under the debt threshold, debt servicing and
interest payment are rising, leading to the need to restructure the debt portfolio.
X X
Government issued Decision Number 689/QD-TTg, dated May 4, 2013,
approving a medium-term debt management program for the period 2013–2015. X X
The Ministry of Finance has prepared an updated medium-term debt management
program for the period 2016–2020, with strengthened risk analysis based on
additional scenarios and updated macroeconomic assumptions.
X X X X
The government has issued Decree Number 87/2015/ND-CP, dated October 6,
2015 which replaced Decree Number 61/2013/ND-CP, dated June 25, 2013,
adopting the audited reports on the public dissemination of the key financial
performance of all state economic groups.
X X
Based on the security review results, IBM (contractor) has made corrective
measures to improve the security of TABMIS. X
MOF issued a decision 3317/QD-BTC dated 24/12/2014 on regulations on
financial information security for public financial information systems. X X
The regulation has been approved by the minister of MOF through his Decision
2247/QĐ-BTC dated 06/9/2013, which serves as the legal basis for carrying out
evaluating the legislation implementation situation in PFM across the country.
X X X X
The government adopted accounting law in 2015, which mandates establishment
of the internal audit function in government agencies. The accounting and audit X X X X
31
Result
Co
ord
inatio
n
Tra
nsp
are
ncy
Rev
enu
e
Effectiv
eness
Efficien
cy
policy department of MOF is tasked with drafting the internal audit regulation
pursuant to the accounting law. The internal audit function will be managed by the
supervision department at the line ministries.
The revised law on import-export tax was issued in April 2016 that promulgates
the new contents and revised tax rates in accordance with the recently signed trade
agreements.
X X X
Law on fees and charges was issued in November 2015 that promulgates the list
of fees and charges to be collected as well as the authorities responsible for setting
the price of user fees and charges.
X X X
Revised law on special consumption was issued in November 2014 that applies
revised tax rates toward selected special consumption goods. X X
The government adopted the accounting law (2015) to develop the consolidated
the government financial statement in which public accounting standards will be
applied.
X X X X
The accounting law of 2015 requires MOF to prescribe accounting standards
based on international standards. The most recent circulars issued by MOF are
Circular 200/2014/TT-BTC applicable from January 2015, Circular 210/2009/TT-
BTC, and Circular 202/2014/TT-BTC. They provide guidance on the Vietnamese
Corporate Accounting System and try to align VAS more closely with
international accounting standards.
X X X X
The State General Accounting (SGA) function was established pursuant to
Decision 1188/QD-BTC in 2014. The SGA will be responsible for preparing the
consolidated government financial report in accordance with public accounting
standard.
X X X
The Ministry of Finance issued Circular 111/2015/TT-BTC regulating the
government bond issuance in the domestic market. It also provides procedure for
bond buyback.
X
Decree 24/2016/ND-CP on cash management policy was issued on April 5, 2016.
The state treasury has implemented TSA arrangements, consolidating cash
balances from more than 700 accounts. Cash balance consolidation has helped
optimize the use of cash balance, minimized borrowing requirements, and
minimized the risk of temporary cash shortages.
X X X
The Ministry of Finance has drafted the revised state asset management law
following the Constitution 2013. The output of MDTF provided helpful
background and analyses to the revision of the state asset management law. The
draft law was approved by the prime minister in May 2016 and will be submitted
to the National Assembly in late 2016. It is expected to be passed by the assembly
by the first half of 2017.
X X X
The prime minister has issued Decision 08/2016 dated February 26, 2016 to
institutionalize the centralized procurement mechanism adopting the framework
contract concept that the MOF learned from U.K. experience through the study
visit to the United Kingdom under the MDTF-2.
X X X
32
Result
Co
ord
inatio
n
Tra
nsp
are
ncy
Rev
enu
e
Effectiv
eness
Efficien
cy
Tax Law on Environmental Protection (2010); Decree 67/2011/NĐ-CP providing
guidelines to implement the Tax Law on Environmental Protection; circular
guiding the implementation of Decree 67/2011/DN-CP; Decree 69 to supersede
the Decree 67/2011; Circular 159 to revise the circular guiding the
implementation of Decree 67/2011. Effective since January 1, 2012.
X X X X X
Tax Law on Utilization of Non-agricultural Land (2010). Effective since January
1, 2012. X X X X X
Law on Amendment and Supplementation of a Number of Articles of the Law on
Corporate Income Tax (09/6/2013). Effective since January 1, 2014. X X X
Law on Amendment and Supplementation of a Number of Articles of the Law on
Personal Income Tax (23/1/2012). Effective since July 1, 2013. X X X
Law on Amendment and Supplementation of a Number of Articles of the Law on
Value Added Tax (19/6/2013). Effective since January 1, 2014. X X X
3.25 In summary, the project played an important role in preparing and adopting 22
important laws, decrees, and decisions that improve the PFM system in a significant way.
The Trans-Pacific Partnership also provided a strong incentive for this. The new budget law,
which is considered key by both government and development partners, should also be
included on this list as there is a credible logical link between the PEFA results and the
revisions of the law.
Achievement of the Objectives
Objective 1: Strengthen Capacities for Increased Coordination in Public Finance
Management: Substantial
3.26 A number of actions contributed to improved coordination capacity; however, there is
no specific evidence of the objective being surpassed significantly.
Objective 2: Strengthen Capacities for Increased Transparency in Public Finance
Management: High
3.27 There are strong, nonincremental results listed in table 3.1 that are associated with
substantial improvements in transparency. This, for instance, includes the publication of
audits of state economic groups, which for a long time have been seen as “black boxes.”
Objective 3: Strengthen Capacities for Improved Revenue Mobilization: High
3.28 Part of the policy actions completed were aimed at allowing Vietnam to meet its
commitment under the Association of South-East Asian Nations. The others strengthened the
revenue base or tax administration at various levels of government
33
Objective 4: Strengthen Capacities for Effective Public Expenditure Management:
High
3.29 Almost all the key policy action had a bearing on effectiveness of public expenditure
management. A specific example concerns average maturity of bonds, which has been
doubled in two years thanks to the measures prepared under the project and subsequently put
in place.
Objective 5: Strengthen Capacities for Efficient Public Expenditure Management: High
3.30 This PDO was also affected by most of the actions discussed above. For example, the
procurement action is expected to increase efficiency, while also contributing to higher level
PFM objectives, such as improved governance.
3.31 In summary, policy actions taken were deep and largely irreversible, while capacity
building has been very significant. The project exceeded its goal of merely strengthening
capacity in various areas.
4. Efficiency
PMFRP
4.1 The main potential driver of inefficiency relates to delays in project implementation.
Some may in theory be justified by the cost overrun and the need to provide additional
financing, but without procurement delays, this could have been done sooner. Also, the
delays in the development of the TSA and COA resulted in delayed benefits from these
measures.
4.2 On the other hand, efficiency is also about whether project resources were used in a
way that suggests high rate of return. (Economic or financial rates of return are not calculated
for this project.) Given that the bulk of project resources (at least 80 percent) were used on
TABMIS, the clear driver of efficiency relates to the rollout of this system. According to the
Vietnam Treasury Department, the cost breakdown was: (i) Oracle licenses, US$14.5
million; implementation services, US$40.7 million; hardware and system software, US$11.6
million; design and IV&V consultancies, US$2.1 million for a total of US$68.9 million. The
cost of the Telecom network, which is shared with other government applications, was borne
by the MOF and is not included. Training costs are also not included. Therefore, according to
these figures, the total cost of TABMIS is around US$70–75 million. This is in line with
implementation user costs for other large budget execution systems projects (e.g., Indonesia
and Pakistan). The time taken for implementation (10 years) is also comparable.
34
Figure 4.1. Key FMIS Indicators for Selected Countries
Source: IEG
4.3 A related issue concerns the system’s functionality. Chart 4.1 above provides
comparison with four countries with PFM projects assessed by IEG during FY16, as well as a
composite score reflecting best practice (not necessarily from the same country). The chart
indicates that not only Vietnam’s FMIS outperforms the other four comparators, but also all
but one (noncore functions) dimensions of the score are above 75 percent of best practice,
reflecting a high level of functionality and efficiency.
4.4 Therefore, even though minor inefficiencies in terms of delays were present, they
were within the expected norms for this type of operation. There is also strong evidence that
the large majority of project proceeds were used efficiently. Considering these various
factors, efficiency is rated substantial.
MDTF II
4.5 The operation was affected by a number of inefficiencies: (i) initially delayed
implementation and extension of closing date by 30 months; (ii) completion of two IPs
instead of the expected four (even if it should be noted that undertaking the fourth would
have required topping-up the fund); and (iii) cancelation of part of the grant, and return of
unused funds to donors (amounting to the additional financing). However, there were
technical reasons behind these events. The original timetable was unrealistic, especially as
developing a pipeline of subprojects and putting implementation capacity in place should
have been expected to take at least a year. Furthermore, the additional financing in 2011
resulted in the need to extent the project (by a year, which should have been seen as
insufficient). Finally, based on IEG interviews, it appears that the timetable was driven in
significant part by some donors’ internal procedures regarding disbursements.17
4.6 As also noted in the ICR, elements of this operation contributed to efficiency.
Specifically, the polling of donor resources decreased transaction costs for the government.
The concentration on a single ministry helped in this respect by avoiding potential “turf
battles.”
4.7 The PMU and Bank team could have accelerated commitments and disbursements,
and thus avoided cancelation of funds by funding additional subprojects. However, they
103 5 8 10
210 8 7 8 5 9
157 4 3 4 5
2514 10
23
11 9
40
22 2534
16
34
100
54 51
76
46
59
0
20
40
60
80
100
Max score Zambia Cambodia Vietnam Malawi Ghana
Sco
re
TSA coverage Tech Features Non Core Func
IFMIS Coverage Core func System strength
35
appropriately chose to preserve subproject quality over low reward or insufficiently prepared
activities.
4.8 Ultimately, the quality of the subprojects is reflected in the results they achieved or to
which they contributed. This was a real strength of the operation considering that one may
argue that this small operation contributed to more policy actions and institutional change
than the last two PRSC operations (World Bank 2015). This assessment disagrees with the
ICR conclusion that the project was inefficient because “transaction costs incurred by the
Bank were rather high. The Bank task team, including senior management, spent a higher
than usual amount of time and resources on project implementation support for a project of
the size of the MDTF-2.” Bank inputs were well utilized and contributed to the important
outcomes. The main reason behind this different perspective is that at the time the ICR was
prepared the full outcomes of the project had not yet been attained.
4.9 The project experienced inefficiencies that were important at the micro-level but were
dwarfed by the overall achievements of the project that are conceptually consistent with a
high economic rate of return, which cannot readily be measured. This assessment gives
prominence to the latter and as a result, rates efficiency high.
5. Outcome Ratings
5.1 This assessment has benefitted from the fact that results attributable to the two
operations are now visible that were not measurable when the ICRs and IEG reviews were
prepared one to two years ago. Policy actions implemented in 2014–2015 that originated
from the projects were especially important in this respect, notably in the case of MDTF II.
These factors together with validation from the fieldwork undertaken by IEG have resulted in
the appreciation of both outcome and efficiency being somewhat different from earlier
reviews.
5.2 The high strategic relevance for both operations is not only related to strong links
between objectives and government and Bank priorities, but also to how the operations
complemented each other and others (e.g., DPOs). Similarly, the relevance of design for both
operations was substantial. The results framework was a weakness, in one case because of
the logframe utilized and insufficient restructuring and in the other case because of the
demand-driven nature of the operation.
5.3 All five objectives of the PFMRP project are rated as substantial. The drivers of this
rating include the realism of objectives that are set as intermediate steps within a longer term
process, the effectiveness of the TABMIS notably in terms of coverage and supporting
arrangements (e.g., COA and TSA), capacity building having been sustained, and positive
contributions to higher level objectives.
5.4 Despite delays of almost five years in implementation, PFMRP efficiency is
considered substantial. The length of implementation of 10 years for this type of project is
within the normal range, and project resources were used efficiently for TABMIS. Based on
the preceding findings, the outcome rating for PFMRP is satisfactory.
5.5 MDTF II met its various objectives—some being rated high, others substantial. The
main driver of these ratings was both the sustainability of capacity building, and the fact that
important goals that were not yet reached at project closing were achieved in the two years
36
that followed. Project resources were used in a highly efficient manner to attain these
objectives. The project suffered from delays, but the overall implementation period of four to
five years is typical for this type of demand-driven technical assistance. Based on the
previous assessments, MDTF II outcome is rated highly satisfactory.
6. Risk to Development Outcome
CROSS-CUTTING RISKS
6.1 Both operations share a common risk of the PFM reform being given lesser priority
and achievements to date being undermined. Given the track record during the two and half
years since the operations closed, this risk appears to have been mitigated, except for the
following important aspects:
The macroeconomic situation is relatively sound, even though there are
vulnerabilities, and the budget is quite tight. This may result in some parts of
government resisting a deepening of PFM reforms, which according to the 2013
PEFA18 remains a priority, and potentially arguing for reversal of some actions.
Considering the level of commitment shown during the past three years by
government, information collected by the mission on plans to continue the reforms
and measure progress around 2019 through another PEFA, and taking into account
further planned and ongoing donor supported (even if more segmented than before)
this risk appears quite manageable and not significant.
The segmentation of the budget between recurrent under MOF and capital under MIP
remains in place. The coordination between the two has improved thanks to measures
supported by the projects and with the progressive introduction of multi-year
budgeting through MTEF, but not sufficiently. The declining share of public
investment to GDP—which has been cut in half since the mid-2000s—and the new
public investment law aimed at increasing the efficiency of investments also reduces
the scale of the problem. Current public investment, hovering at about 5 percent of
GDP, needs to rise to accommodate sustained growth. But, attention needs to be paid
to the recurrent implications of investments, which in turn require continued
improvements in the institutional coordination. Furthermore, some of the investments
(notably in infrastructure) are expected to be based on public-private partnerships for
which an enabling law was recently passed. These, too, may put added pressures on
the budget, especially if the projects are not well designed and subject to competitive
tender, and if contingent liabilities are not well managed.19
6.2 The two projects also share a common experience that contributes to sustaining
development outcomes at the “bottom” level:
Many MOF staff and other civil servants were trained under both projects. In the
absence of a tracer study, it is difficult to verify whether those beneficiaries have
moved to other positions inside or outside government and, if still employed by
government, have used the skills acquired. Mission interviews revealed that turnover
of civil servants with MOF was quite low—retirement being the most commonly
cited reason for leaving government. Almost all of the officials interviewed
37
confirmed either they had benefitted from the capacity building directly or their
department included people that had, even if they now often held higher positions.
Similarly, counterparts confirmed that the contributions of external consultants,
notably procedure manuals, were still being used in operations and to train new
recruits. They also explained how study tours had contributed to a mind-shift within
the MOF. In parallel, the different information systems developed under the projects
was maintained and used.
Even though the above observations are not based on a rigorous quantitative
assessment, the sheer number of identical responses from stakeholders representing
all activities funded by the operations and the specificity of examples cited indicate
that capacity building efforts have been sustained and are likely to continue, at least
in the medium term.
Finally, both government and donors realize that the PFM reform still contains a rich
agenda that needs to be completed. Continued support by donors, even if more
segmented than before, should contribute effectively to that goal.
PMFRP
6.3 The PAD had rated the risks being faced by the operation (prior to mitigation) as
“high” and had identified the following issues, which have been updated to reflect present
circumstances:20
Lack of ongoing support for cross-departmental working, particularly between MOF,
State Bank of Vietnam, and MPI. This risk has not been eliminated.21
Lack of ongoing support to ensure "buy in" and ownership at line ministry, province,
and spending unit level. This risk remains present but appears modest.
Lack of partnership working among donors and between donors and government. The
segmentation of donor support will not affect past achievements and should be
manageable going forward thanks to existing coordination mechanisms.
Additional risks from the present standpoint are the following:
o Insufficient budget allocation for operations and maintenance of the TABMIS.
Average annual costs for telecommunications, service fees, and hardware
upgrades are estimated in the range of US$7 million to US$10 million. The IEG
mission concluded that this has been adequately budgeted so far and was likely to
remain so.22
o Proliferation of information technology systems undermining the TABMIS and
resulting in inefficient parallel systems. Even though there are instances of
parallel systems being developed, the IEG mission found they are largely
compatible with, and appear complementary to, one another.
o The development of systems is only effective if used effectively. In the case of
debt management, while recording of external and internal debt has improved,
this has not prevented an increase in public debt to the point where sustainability
may prove more challenging, according to the IMF.
6.4 The issue of system integration calls for the following clarification on how risks have
been mitigated:
38
Excel-based budget preparation systems (not automated): Budget estimates are loaded
into TABMIS and all in-year changes are entered directly into TABMIS.
DMFAS: An interface between DMFAS and TABMIS has been developed and is
operational.
Tax and nontax receipts: Tax and customs receipts are deposited in Treasury Single
Accounts (TSAs) of the State Treasury. Budget revenue information is exchanged
among the State Treasury, Tax and Customs Departments and commercial banks
through centralized Tax Collection systems/applications (TCSs), the Tax Collection
e-Portal, Customs e-Portal. The State Treasury receives and controls budget revenue
information and runs the automated interface between TCS and TABMIS GL. Non-
tax revenues are recorded in the TABMIS GL on the basis of information received
from TCS, Finance Departments or Spending units
TABMIS is connected with banking systems via the VST payment applications for
both bilateral settlement and inter-bank clearance IBPS and then via enterprise
service bus connects to banks under the two mechanisms of webservices and MQ.
There is no central human resource or payroll system: Payments for payroll are routed
through TABMIS based on payment requests entered by spending units in the
TABMIS.
6.5 The analysis does not identify any substantial risks, especially as TABMIS
maintenance seems likely and system integration works reasonably well. The
macroeconomic and some institutional risks remain present, but the government has a track
record for managing them. There is therefore moderate risk that project achievements will
not be sustained.
MDTF II
6.6 The PAD rated overall risks as modest and identified key areas where mitigation
would be needed. Aside from macroeconomic risks, the following issues remain relevant:
Impetus for PFM reform would lose momentum or political support. PFM reform is a
complex task and requires considerable time and effort over many years. This risk
remains relevant even if some of the specific needed reforms (including the new
budget and the public investment laws) have been adopted and are being
implemented. This risk continues to appear quite manageable at present, and the
likelihood of reversal of implemented policy actions appears low.
Institutional capacity in MOF will not be strengthened sufficiently to manage PFM
reforms over the next few years. Departments in MOF would drive PFM reform
activities in an uncoordinated manner, likely reducing the impact of reforms. Not only
was this risk avoided, the MOF appears well positioned, at least at the technical level,
to champion further reforms.
Essential PFM reform initiative activities outside MOF’s mandate will not keep pace,
particularly procurement reform and external audit and legislative oversight
strengthening. Also, the slow pace of implementation may undermine PFM reforms,
and complementary governance reforms23 need to be accelerated. These have more to
do with the sustainability of the reform program than of achievements under the
project. However, as reflected in the 2013 PEFA, there are challenges ahead.
39
6.7 The project restructuring paper, which was issued at a time implementation was
facing delays, includes a less sanguine appreciation of risks, which are raised to
“substantial.” The risks identified were broadly correct and properly mitigated, including:
(i) Continued delays. Once the decision was made not to attempt to prepare IP 3 and
extend the closing date, this was no longer an issue.
(ii) Lack of synergy within MOF and too many activities. The new FDS provided a
reference framework that not only guided the activities, but also appears to have been
a factor for sustaining them beyond the project to attain the ultimate objectives.
Furthermore, the fact that all activities were within MOF limited this risk.
(iii) Spreading the project too thin and not achieving substantive results. This risk was still
present at closing. However, the main stakeholders recognized they were embarked
on a process that needed to be sustained through additional actions, such as the
adoption and implementation of laws and regulations. These actions were therefore
continued after the project closed.
6.8 In the absence of other risks not identified by this assessment, the analysis suggests
there is negligible risk to achievements under MDTF II being reversed. However, it should
be noted that the risk being faced by the PFM reform program appears higher.24
7. World Bank Performance
7.1 Bank performance was satisfactory or better for both projects. In the case of PFMRP,
the high quality at entry contributed to attainment of outcome, as did proactive
implementation support of the MDTF II.
Quality at Entry
PFMRP
7.2 Overall, PAD quality, a reliable reflection of quality at entry, was very high at the
time it was designed. Paying greater attention to public fiduciary systems, and doing so
systematically as a complement to public expenditure work, was still a recent evolution in the
development community and the Bank.25 Some the elements of the operation’s design are no
longer utilized (logframe) or are not considered good practice (e.g., less than eight-year
implementation period for PFM operations). However, other aspects of design may still
provide a blueprint for a first generation PFM operation.
7.3 Component design: The components were defined based on a clear diagnostic of the
PAD. Their internal sequencing, among subcomponents, was well considered and best
among four PFM operations assessed by IEG during FY16, reflecting strong conceptual and
operational thinking. There was considerable attention to detail, with clear guidance on how
to implement the operation and to anticipate and deal with issues that was not relegated to an
operational manual. For instance, the document included no objection by the Bank to use of
the sole-source method to retain service providers, recruited previously, with unique
knowledge and comparative advantage.
7.4 The operation was selective in areas it supported: budget and debt management. The
importance of assessing SOE risks was also integrated into the design—a risk that remains
40
present and potentially significant to date. Asset management was part of the TABMIS
module. However, revenue management was excluded, in part because the necessary
diagnostic was not done. This appears to have been a sound choice because it avoided greater
complexity and in light of the failed experience under the 2007 Tax Administration
Modernization Project cancelled in 2015. Some aspects of tax reform were devolved to
MDTF I (and then to MDTF II).
7.5 The TABMIS design is assessed in some detail in appendix C. The system consisted
of modular packages that could be expanded and was suitable for the situation in Vietnam.
Also, a study fund included a follow-up project if needed, which constitutes good practice.
The additional financing obviated the need for a follow-up operation, while also redressing
the optimistic implementation timetable.
7.6 Broader context: The link to other operations quite clear. Even though the PFMRP
PAD could not anticipate most post-2003 related operations (second PRSC series and MDTF
II), it envisaged a complementary relationship between the project and the first PRSC series
and MDTF I. Another important aspect of the approach was that it served a donor
harmonization mechanism through cofunding of all operations—except for the PIR and
EMCC—with the government in charge of implementation. Finally, the operation was
underpinned by solid analytical work.
7.7 Operation and institutional design parameters: The operation benefited from sound
arrangements.
The steering committee concept was appropriate. Institutional arrangements avoided
overcomplicated institutional structures (such as in the Cambodia PFM operation).
Sound PMU design consisting of four teams.
The CTA approach (based on a long-term, part-time retainer contract with an
international expert) for the MTEF, which was a good way to reinforce
implementation capacity without undermining country ownership.26
MTR conducted two years after effectiveness.
7.8 However, some narrow shortcomings affected disbursements.
The project would be implemented during 5.5 years and complete disbursements in 6
years (including a grace period). This implementation period has proved too short for
operations supporting FMIS, but perhaps this was not well established in 2003.
The fairly linear disbursement profile seems inconsistent with the large investment in
TABMIS.
Procurement: Thresholds were set too low. This seems to be a Bank-wide issue and is
discussed in the fiduciary section of this report.
7.9 Alternatives considered, analytical underpinning, and integration of lessons
learned: The design found the right balance between defining the scope of the project too
broadly and too narrowly. A very narrow (IT only) operation was rejected in favor of a more
holistic approach. An approach including revenue management was also rejected so as not to
increase complexity. Subnational governments, which managed 50 percent of expenditures,
were included as opposed to a sole focus on central government—resulting in a longer
implementation period. These choices were validated by implementation experience.
41
7.10 The project took account of experience in Vietnam and PFM projects elsewhere
effectively. It is also took stock of existing and planned operations to minimize overlap with
them (World Bank 2003a). The design was based on solid analytical work, including analysis
of the budget law, a joint IMF-World Bank study, various PFM related assessments, and the
2003 VDR. The risk of slow implementation was noted too, but a mitigation measure (start
implementation using a grant from the Japan Policy and Human Resources Development
Fund) proved insufficient.
7.11 M&E: Project M&E arrangements reflected knowledge and practice at the time of
design, but proved insufficient in practice.
7.12 Overall, the project at entry was based on a thorough appraisal and benefitted from
attention to conceptual and implementation details rarely encountered in other similar
operations designed at the time and later. There were weaknesses associated with M&E and
optimistic assumptions over time needed for implementation, driven in part by unwritten
Bank guidelines. Despite these issues (which were or should have been addressed during
implementation), the overall strength of all other aspects of the operation’s design warrants a
highly satisfactory rating for quality at entry.
MDTF II
7.13 The project design was finalized during 2008 and 2010, with three different PADs
prepared each year. The reason for this unusual feature was the project was being funded
from a multi-donor trust fund. Its scope and content had to be adjusted to take into account
various factors, including additional funding from donors. It also resulted in a few awkward
passages where past events such as effectiveness are discussed ex-post. The adjustments
were relatively simple to process as project approval was at the level of the Regional Vice-
Presidency and Board approval was not needed. Even though three PADs inform this review,
all references in this text pertain to the last (2010) version.
7.14 Another aspect of the project was that it was demand driven and activities were not
pre-determined. Appraisal was thus based on a pipeline of potential subprojects. These were
bundled together and eventually formed the basis of two implementation plans (IP 1 and 2).
A question worth asking at the outset is whether this concept could be justified a priori, given
the risk of spreading resources too thinly. This assessment concludes that it could for a
number of reasons other than the various aspects of quality at entry discussed below: (i)
additionality and complementarity with the PRSC series and PFMPR; and (ii) lessons learned
elsewhere, even if much earlier – namely the Uganda TA III,27 which was subject to an IEG
(then OED) performance audit in 1995. Even though the project was designed two decades
before this one, they both share the characteristic of being based on the principle of flexibility
(within an overall PFM framework) and evolving objectives (i.e., indicators).
7.15 Component design: The original project had seven components (in practice thematic
areas and not traditional components) that were seemingly unrelated and relatively small in
terms of average financing (less than US$1 million). However, an important factor was that
all the activities were taking place within the Ministry of Finance, which helped ensure
overall coherence. Furthermore, the first six components were closely related to ongoing
PFM reforms. The justification of including the last, price control, was and remains less
apparent especially as Vietnam was increasingly becoming a market economy with a
42
competitive internal market (World Bank 2010). The project restructuring reduced the
number of components to three, each covering a number of themes. The most notable change
was that price control was no longer prominent and appears as a minor activity (US$30,000)
under the project costs presented in the ICR (annex 1).
7.16 Broader context: The operation complemented other PFM-related reforms and
operations and benefitted from multi-donor support. It filled existing gaps by building
capacity in PFM within the MOF. The design recognized that better integration between
MOF and MPI would be desirable, but correctly did not over-extend itself by covering two
ministries.
7.17 Operation and institutional design parameters: The operation was supported
through appropriate arrangements:
The project was primarily aimed at supporting the MOF, which was appropriate at the
time.28
The IP approach was suitable, even though the expectations that such plans would be
developed annually was over-optimistic because of the time needed to complete each.
This caused disenchantment for some donors who decided to provide standalone
subsequent support.
The PMU design called for support by a peripatetic CTA on a long-term contractual
basis. This helped ensure that tacit knowledge for managing the program was present.
This aspect of the design may be considered best practice as it empowers national
entities while ensuring implementation agencies have access to know-how.
The original implementation period was too short because of the delayed start.
Given the nature of the operation and constant exchanges on subprojects, the planned
annual supervision seems appropriate.
The criteria for selecting subprojects were not well defined. This issue was resolved
prior to approval of IP 2.
Procurement: Thresholds were set too low, especially in light of ownership shown by
stakeholders and willingness to recruit a short-term international adviser.
The institutional arrangements were somewhat complex from the standpoint of the
number of beneficiaries. However, excessive complexity was avoided through
oversight responsibility being given to the PMU and the steering committee.
An MTR resulted in project restructuring that clarified and streamlined project
activities and improved various aspects of implementation and results-orientation. A
notable change was that beneficiary departments were empowered to manage their
own activities, which may have contributed to the activities initiated being sustained
and successfully completed after project closing.
7.18 Alternatives considered, analytical underpinning, and integration of lessons
learned: The project refers to a limited number of PFM-related studies undertaken during the
second half of the 2000s. Given that provision for specific studies (notably PEFA) was made
during project implementation, the knowledge base was dynamic and provided as needed.
The lessons integrated into the design are drawn mainly from those learned under MDTF I
43
(World Bank 2010). These refer mainly to the strategy and have limited project specific
relevance. Nevertheless, lessons considered also correctly led to periodic implementation
plans to underpin the operation as well as improved donor harmonization. This area could
have been enhanced through greater consideration of lessons learned elsewhere from
demand-driven public sector capacity building schemes—even though it is not evident that
such considerations would have resulted in much different design. The PAD does not offer
any alternative designs. But, it correctly justifies the project in terms of the Paris Declaration
and its subsequent agenda.
7.19 M&E: Project M&E was appropriately flexible at the outset and improved over time.
7.20 Quality at entry was generally strong with minor and manageable weaknesses,
notably in the form of an optimistic implementation timetable. It is rated satisfactory.
Quality of Supervision
7.21 Quality of supervision and reporting of PFMRP was uneven and strong throughout
for MDTF II. For both operations, the high quality written feedback from the Country
Management Unit is noteworthy. In contrast, the sector’s inputs overall were minimal.
PFMPR
7.22 Project implementation took place over 10 years during which time Bank supervision
was uneven. There are four distinguishable periods or milestones.
During project launch and the first two years of implementation, considerable efforts
were devoted to initiating activities, albeit using optimistic timetables not only
concerning complicated IT procurements, but also more “straightforward” actions
such as COA and TSA where the need to build political consensus was
underestimated.
During the second half of the 2000s, implementation delays were substantial and
evident as reflected by the original disbursement lag, which by the end of the decade
had accumulated to four years. However, this was neither acknowledged or
recognized by the team (other than in country director [CD] feedback) nor dealt with
effectively.
Contributing to the problem, the MTR undertaken in December 2006 did not go far
enough.
During the last three years of project implementation, policy and implementation
issues were progressively resolved, thanks to both the efforts of the task team and
advice provided by additional experts. These efforts paved the way to achieve various
outcomes.
7.23 The ISRs provide insights into the quality of Bank supervision, even though formal
interaction with the PMU and other stakeholders was more frequent than ISRs, which were
not prepared after all missions. These documents were reviewed as part of the present
assessment, which resulted in a number of observations supervision activities are reflected in
reporting of project implementation progress through periodic status reports (ISRs).29 The
first four project status reports were comprehensive and detailed. Reporting quality in ISRs
declined and became unsatisfactory, as basic required information (notably pending actions)
44
was no longer provided until the last few ISRs. Various portfolio managers providing
feedback on ISR on behalf of the CD repeatedly noted the various aspects of this problem.
The task team never effectively incorporated the requested improvements. Other aspects of
supervision reflected in status reports are detailed in appendix E and may be summarized as
follows:
Quantitative
The reporting interval was on average every 8 months, with significant variations
during the implementation period—low of 2 months and high of 15 months.
Reporting every 6 months is consider good practice, while exceeding 12 months
disregards Bank guidance.
Supervision mission frequency was every 8 months, which is an over-estimate
because no ISRs were associated with two supervision missions. However, there is no
record of the project being formally supervised more than once after May 2011,
which is insufficient even if by then the project was finally broadly on target. The
interval between supervision missions from 2005 to 2008 was about 10 months. The
mounting disbursement lags should have triggered a greater frequency—especially
given the bulk of the team was field based. On the other hand, initial supervision was
intense.
Interval between mission and ISR was on average 4 months, which implies that
management does not always receive up-to-date information—good practice is
typically considered two months or less. However, the aggregate figure is affected by
four late filings by 8 months or more, without which the average interval would be
less than 2 months.
CD comment is entered regularly from the fifth ISR onward (expect in two cases with
no submission by team). The model in Vietnam is for the CD to delegate to the
portfolio manager (there were four successive ones), who provided generally
substantive and clear guidance. The only shortcoming relates to the fact that
requested modifications and improvements were not introduced by the team, and
more proactivity to ensure this outcome might have been desired.
Sector manager comments were either not entered or of quite limited scope and
guidance. The lack of clear guidance to the team, including on the need to deal with
CD comments, constitutes a weakness. It contributed to the persistence of
fundamental issues, such as overhauling indicators, not being addressed. Another
outcome was that realism of ratings were neither raised nor addressed, and this may
have contributed to inefficiencies in terms of length of implementation of components
other than TABMIS.
Qualitative
Team composition included sectoral expertise only once at the outset. This may have
affected the implementation of the MTEF. Initial continuity in the task team
constitutes best practice. There was substantial delegation of periodic dialogue to the
field-based team and participation by the original task team leader (TTL) in
supervision during the first two years of implementation. Similarly, during the last
year of implementation, supervision teams included highly qualified and well-
45
respected experts who, according to all stakeholders, were instrumental in ensuring
key objectives were attained.
Basic information is missing from all ISRs, including a full list of covenants and their
status. Similarly, apart from its shortcomings, the logframe included 17 useful
intermediate indicators that were never included or reported.
ISRs generally provide a good presentation of status and issues. But, information on
what follow-up is needed, by whom, and by when is lacking—the implementation
roadmap not evident.
Between 2005 and 2011, the ratings, notably for implementation and M&E
(throughout implementation), fail to reflect realities and slow progress.30 Numerous
instances of unrealistic expectations were reflected in ISRs, notably with respect of
the adoption of COA and TSA, which were finally realized about six years behind the
original schedule (as discussed in the efficiency section).31
There seems to have been limited linkages established with the two PRSC series,
which is mentioned in only one ISR.
The hesitancy of the Bank to extend the operation once the need became evident and
formally recorded in ISRs may have been counterproductive as it increased
uncertainty and undermined planning of activities. On the other hand, the task team
assumed the necessary extension would be approved in due course. When it was
done, it was for a period long enough to complete key activities.
7.24 As noted above, management performance in terms of strategic and process-related
advice differed widely when the country and sector were compared. The former was specific
and to the point, but largely ignored. The latter was frequently not provided, at least not in
writing or pro-forma. There was generally no mechanism for ensuring that the task team
followed board management comments. The lack of formal in-depth restructuring of
indicators and strengthening of M&E, which was largely controlled by the task team, is a
reflection on this shortcoming.
7.25 The MTR took place as scheduled in December 2016. It consisted of a detailed
review of progress achieved at the time, identification of issues, and development of a
detailed work program to ensure implementation would get back on track and be accelerated.
The analysis of mission outputs, made part of preparing the present report, reveals a
comprehensive review of progress during the initial implementation period and a detailed
roadmap for future years that identified policy and institutional actions as well as
intermediate benchmarks to monitor implementation progress. The mission aide-memoire
thus provided a comprehensive update of the project implementation manual. Furthermore,
the review effectively addressed accumulating delays by revising the implementation
timetable and planning for a subsequent extension of the closing date by about two years—
the disbursement profile was extended accordingly. It also avoided added complexity by
agreeing with counterparts that support to tax administration and policy would be covered by
the future MDTF II.32
7.26 The main shortcoming of the MTR was it did not identify or address the main
shortcoming in the original project design related to its chain of logic and M&E. Specifically,
the results framework for the project, based on a logframe,33 was weak and should have been
overhauled. Only intermediate outcomes were changed two years before eventual closing.
Furthermore, consideration should have been given to including impact assessments into the
46
design. More minor issues, which do not significantly undermine the overall quality of the
MTR, were the following:
No consideration was apparently given to raise the low prior review thresholds, even
though procurement was deemed satisfactory. These thresholds, notably for
consultants, were set at lowest levels applicable Bank-wide at the time.
There is no explicit discussion of legal covenants. A question that might have been
asked concerns whether implementation delays and a possible need to restructure the
project in light of experience would justify a second MTR to be undertaken later, say
in 2008 or when circumstances justified it.
7.27 In practice, there was not any immediate project extension (apparently due to
management push back in favor of a “wait and see’ approach) and restructuring of indicators.
Dropping one or both second and third components could have been considered then to
decrease project complexity and focus on TABMIS. However, no compelling evidence
suggests that persisting with these other activities ultimately undermined outcomes or
efficiency.
7.28 TABMIS accounted for the bulk of expenditures under the project. Together with
systemic changes (notably COA and TSA) that accompanied its implementation, it was the
primary contributor to the project outcome. The implementation support provided by the
Bank warrants scrutiny. To succeed, the Bank team needs experienced specialists on board or
available to advise the client on important technical issues during the design and
implementation phases. These specialists need to be familiar with procurement practices and
procedures for IT-related procurements and the World Bank rules. As verified by the
mission, specialized IT expertise within the Bank project team was made available to the
MOF to support the design and implementation of the TABMIS, notably during the critical
system roll-out period in the early 2010s. Also, as noted in the ICR, “during early critical
stage of TABMIS contract implementation, the Bank TTL participated in monthly meetings
of TABMIS Project Monitoring Committee to closely monitor contract execution and
provide necessary facilitations.”
7.29 An area of weakness concerns the misunderstanding of the role of the IV&V
consultants. The consultants misread the purpose of the hiring and saw it as an audit type of
exercise to critique the initial design and the implementation work, instead of helping the
government to ensure the contractor implements the system in accordance with the design
that had been specified and approved earlier. This caused major difficulties, and this
consultancy did not achieve the purpose for which it was intended. The government
terminated the contract. As a result, the government was left with limited support in contract
management and supervision of implementation. This led to a situation where the
government had to rely exclusively on the advice of the implementing contractor (IBM)
during this phase. The terms of agreement for the consultants should have clearly specified
their role.
7.30 Had the Bank been clearer on this point or intervened when issues arose to clarify the
consultants scope of work, the problem might have been avoided. The delays in
implementing the Domestic Debt Recording System should also be noted. A decision was
made at the time of appraisal to fund its expansion by expanding the existing UNCTAD
system that had already been installed in two units at MOF and the State Bank of Vietnam
47
(World Bank 2003a). While this is not clearly stated in project supervision and related
documents, there were implementation delays. More complications arose when in the mid-
2000s the Bank introduced an anticorruption clause in its procurement manual, which was
not acceptable to the UN system because of its own governance system. A waiver of this
clause had to be processed, and took a long time as it had to be approved by a managing
director. This delay reflects on Bank performance. The whole process raises two issues.34
The Development Credit Agreement refers to the 1999 amendment of the World
Bank procurement manual and does not state that further updates would be
automatically applicable to the operation. Perhaps such a close was introduced as part
of some portfolio restructuring, but it was not done at the level of the project. While
the modification of Bank rule was based on solid governance concerns, this
evaluation cannot confirm that its application to this procurement was legally
necessary.
There are other instances of involvement by UN agencies in World Bank operations,
either as a service provider or implementation agent (e.g., in South Sudan).
Presumably, the same issue had to be addressed in other such circumstances and
should have either been dealt with more broadly or by recognizing precedents, if any
(especially as the waiver was ultimately given).
7.31 The review of project implementation, the analysis of ISRs, and experience with
TABMIS reflect a mixed and variable supervision performance, which ranges from excellent
in some aspects to substandard reporting. There are documented instances where the Bank
team’s advice was vital, for instance in obtaining cost savings for Oracle licenses. On the
other hand, weaknesses in M&E were not addressed, and the present assessment is
handicapped by lack of data. Nevertheless, thanks to the persistence of the task team to
address the Bank’s internal procurement requirements that may not have been well adapted
to information systems, the main public fiduciary and governance systems were developed
and are fully operational despite various challenges encountered and substantial delays,
notably in the TABMIS. This ultimately reflects partly the efforts of the Bank team, which
also ensured the cofinancier (DFID) was kept abreast of development and participated in key
supervision activities. Everything considered, Bank performance, including inputs from
sector management, might have been less uneven, and a moderately satisfactory rating best
reflects its varying quality of supervision.
MDTF II
7.32 The supervision of the MDTF was quite challenging because of the very nature of the
project and its demand-driven design and complexity. The support was principally given to
the Ministry of Finance, which has capable staff. This simplified implementation support
somewhat. On the other hand, there were a dozen or so departments to deal with, and each
subproject required advice based on specific knowledge. Technical advisers provided some
of this knowledge. However, the Bank team, broadly defined, needed to complement it and
undertook quality assurance on inputs and at times output—even though the exchanges were
at times incomplete (see box 7.1). Compared to the amounts financed, transaction costs for
the Bank team were relatively high. Nevertheless, the Bank team, while struggling at times
on how to deal with issues such as results measurement and experimenting with different
approaches, exhibited a high degree of competence.
48
Box 7.1. Feedback from a Sectoral Team Regarding Its Degree of Involvement in a
Subproject
Was the sector consulted at any stage of formulation and execution of subprojects? Yes.
What type of feedback/support was provided? The team led the discussions with another team
participating at time and the TTL. After two to three rounds of discussion, there was an agreement
to support this activity. The team was engaged in initial supervision stage but not later on.
Is there a view on the quality, relevance, and implementation status of the work done? It was
difficult to obtain good information on the project status. The MDTF arrangement did not require
the client to share all of the output. The other Bank teams involved may have done more of the
follow-up.
Source: IEG mission interview.
7.33 Supervision was conducted regularly from project approval to 2011, but not recorded
in ISRs. They were not mandatory until then for projects supported by trust funds. Five ISRs
were prepared by the task team (one per year on average), and their review provides a
window into supervision quality. There were long gaps between the first three ISRs (16 and
17 months). The gap between the second and third ISR was in many ways compensated by
project restructuring that took place halfway through the period, which provided detailed
information on the state of project implementation. The first three ISRs were informative,
quite complete, and clearly described status and issues—both conceptual and related to
implementation. For instance, the struggle to come-up with relevant indicators for demand-
driven activities is clearly explained. Similarly, the legal covenants were monitored, and their
status is clearly listed—this was not done for PFMRP. A systematic shortcoming was found
on entry and updating of pending actions, which was also present in PFMRP ISRs.
Management feedback was initially concise, except in the last two ISRs where, in contrast to
detailed CD feedback, the sector’s comments were not provided in one case and were
minimal in the other.
7.34 A strength of the reports was the candor with which performance was assessed and
reflected in the rating. For instance, the second ISR downgraded a number of ratings,
including objectives, in view of difficulties being experienced at the time.35 Similarly, at
closing, the various aspects of project performance were conservatively rated “moderately
satisfactory” even though a higher ratings might have been argued based on the assumption
that ongoing activities would yield important outcomes—as was eventually the case.
7.35 The dialogue with counterparts appears to have been conducted in a constructive
manner. The task team showed flexibility and accommodated emerging priorities, for
example, support to the Financial Sector Development Strategy 2011–2020 (ISR 2). The
team also identified bottlenecks and proposed solutions that were adopted by counterparts,
for example, by improving procurement capacity and simplifying the PMU’s complex
internal procedures. These ultimately contributed to project success.
7.36 Finally, the MTR was conducted in a timely manner. It paved the way for addressing
some of the issues but not all. Restructuring of indicators and modifications to the results
matrix were insufficient. As noted in the ICR and confirmed by the mission through multiple
49
exchanges with the PMU and various MOF departments, “the MTR findings and agreements
led to the critical decisions that included the program restructuring, strengthening mechanism
for policy dialogue between DPs, the Bank and MOF, simplification of the MDTF II results
matrix, and measures to improve project management (particularly the decision by the MOF
to delegate the authority to implement project activities by responsible departments).”
Furthermore, “following the MTR conclusions, the Bank enhanced quality of implementation
support and supervision with more frequent and effective communication and engagement
with the PMU and all responsible departments to provide technical support on terms of
references or project proposals. The Bank team worked closely with the PMU to help screen
and select projects to be financed under MDTF II with more direct links to the PFM
priorities” (World Bank 2014b, 19).36
7.37 The ultimate success of the project is largely attributable to high quality supervision
and ancillary, well-focused dialogue led by the Bank with the various stakeholders.
Implementation support was more frequent and intensive than typical, especially for such a
small TA project. The locally based task team members appear to have gone beyond
expected norms to ensure a successful outcome. The demand-driven project required the
Bank and counterparts to experiment iteratively with various types of support and fine-tune
the approach based on lessons learned under the initial subprojects. In view of the eventual
achievements under this project thanks to proactive implementation support, and
notwithstanding issues noted under the efficiency section that were related partly to donor
procedures and factors outside the Bank’s control, quality of supervision, including post-
closing work on activities not yet completed, and is rated highly satisfactory.
8. Borrower Performance
Government
8.1 Government involvement in both projects was similar, especially as both contributed
to the same overall objective. For the purpose of this assessment, it is useful to decompose
the government into two separate components. The first was the MOF, which oversaw both
projects. The second consisted of the rest of central government, including the office of the
prime minister, MPI, and line ministries, which were responsible for higher level policy
reforms and budget management.
8.2 PFMRP started slowly, which may be partly attributable to MOF as well as the rest of
government not initially giving PFM sufficient high priority (e.g., adopting a chart of
accounts). However, the pace of implementation accelerated in the 2010s and continued after
both projects had closed. Both ICRs as well stakeholders interviewed by IEG highlighted the
key role played by MOF and its high level decision makers as a champion for enhanced PFM
systems and of the required policy actions. Many reforms supported by MDTF II were
completed in 2014 and 2015 well after the closing of both projects.
8.3 The performance of other parts of government was generally strong, even if uneven at
times. Macroeconomic management weakened for a few years around the financial crisis,
and the government response may have delayed policy actions (as seen under the PRSC).
Nevertheless, improvements in macroeconomic stability in the last few years is associated
with greater emphasis on PFM reforms and achievement of key milestones, such as an
50
operational TABMIS and the new budget law. The main failure of government as a whole
has been an inability to address the key issue of budget segmentation between MOF and
MPI—the latter remaining responsible for the investment budget and the former for the
recurrent with insufficient interaction between the two. The need to reposition MPI37 and to
consolidate oversight over the budget remain relevant.
8.4 According to project documents and IEG mission interviews, the steering committees
functioned well.
8.5 The conclusion of this assessment is that despite fluctuations in government
performance, which may have affected PFMRP more than MDTF II, overall government
performance for both operations during their preparation and implementation was
satisfactory.
Implementation Agencies
PFMRP
8.6 The project was implemented through component technical units, and the PMU was
organized into specialized component implementation teams. Largely, this assessment
concludes that implementation on the government side was sound. Implementation delays
encountered during project implementation were to largely attributable to the Bank’s slow
procurement processes.
8.7 The main issue for the PMU was related to the nonperformance of the IV&V
consultants. Following the change in team members, performance was no longer deemed
satisfactory. While the government continued to use some individual and firm consultants in
the support of system functionality, the government also relied on the advice of the TABMIS
provider, which lacked independence. According to information received, while suboptimal,
this arrangement proved workable and did not appear to have resulted in a cost overrun.
8.8 Another issue concerns the effectiveness of the CTA. This area is not highlighted in
project implementation documents reviewed by IEG (e.g., no mention in the ICR). Interviews
with both government and Bank staff proved similarly inconclusive as some counterparts
have left, and recollection was imperfect. Overall, this adviser appears to have been helpful
to the PMU.
8.9 Except for minor problems at the start of the project, the PMU fulfilled effectively its
procurement and financial management responsibilities. Based on this information
implementation agency performance is rated satisfactory.
8.10 Overall borrower performance is satisfactory reflecting both government and
implementation agency ratings.
MDTF II
8.11 Implementation agencies for this project include both the PMU, supported by the
CTA, and the various departments within MOF that were responsible for implementing the
subprojects—increasingly so after the MTR. As noted in the ICR, “after delegating the
implementation of project-specific activities to functional departments, the PMU stepped up
its management role as a facilitator, advisor, and supervisor.” Furthermore, the PMU fulfilled
51
its fiduciary functions well and ensured that procurement and financial management was
undertaken effectively.
8.12 A main risk potential associated with project design was the various departments
within MOF would see the project as a “right” and source of funding for various activities,
including for low priority training and other types of capacity building without significant
ultimate contributions to PFM reforms. This could have resulted in financial resources not
being used in the absence of a sound subproject, or not being used effectively. The fact this
risk did not materialize demonstrates the careful selection of subprojects by the PMU, based
on the advice of the CTA and the Bank, and ownership of the activities by the various units
within MOF and their proactive approach in support of PFM report. The latter is evidenced
by the fact that these departments continued to make good use of the training provided under
the project. For instance, in some cases, the IEG mission was informed that training manuals
developed by experts were still being used to train new staff. Furthermore, various studies,
draft regulations, and laws were finalized, presented to decision makers, and adopted.
8.13 Another important contribution to sound implementation was the PMU and MOF
units were able to recruit highly qualified international experts and utilize them effectively,
according to information gathered during the IEG mission. This is in contrast with projects
elsewhere where a bias against recruiting international experts may result in under provision
of know-how.
8.14 The ICR rating for implementation agency performance reflects the initial slow start
in project implementation. However, this assessment takes into account how the various
MOF departments have sustained and deepened the activities initiated under the project and
have brought to completion or contributed to an impressive number of policy actions since
the project closed. For this reason, the implementation agency performance is rated highly
satisfactory.
8.15 The overall Borrower performance is rated satisfactory, reflecting strong performance
at all levels, especially implementing agencies.
9. Monitoring and Evaluation
What Constitutes a Strong M&E System for PFM Operations?
9.1 The 2005 IEG (then OED) evaluation Capacity Building in Africa made four main
general recommendations also applicable elsewhere, including: “Sector and thematic
leadership should develop sector-specific guidance on diagnosing public sector capacity
needs and ways of monitoring and evaluating interventions” (OED 2005). This reflects the
difficulties encountered around the time (2002–2003) PFMRP was being designed in setting-
up appropriate M&E systems for public sector projects, of which PFM operations are a large
subset. The MTDF II designed at the end of last decade in part addressed the diagnosis of the
needs by supporting a demand-driven TA scheme, which still faced M&E challenges as
described below.
9.2 The 2005 report goes on to note “since it is not possible to directly attribute
development impacts to capacity building efforts, the evaluation looks to intermediate
52
outcomes “to assess the effect of efforts to enhance capacity” (OED 2005). This was an
approach also largely followed herein.
9.3 Except for a few operations,38 the assessment of Bank-funded projects in support of
PFM approved during the 2000s has now been completed.39 They have generally revealed
systematic weaknesses in M&E. This is largely due to excessively ambitious and
complicated PDOs and misaligned indicators. Furthermore, the assessment herein of
operations in Vietnam, as well as that of others undertaken in parallel with this study,40
reveals that an M&E system needs to track results associated with three types of project
activities. They are: (i) establishment of a functional information system; (ii) capacity
building through TA, training, and study tours; and (iii) TA for preparing legal and
regulatory actions and their implementation. A comprehensive M&E system should thus be
based on the features detailed below.
9.4 Indicators should be closely related to activities funded by the project and further
results attributable to them, at project’s end. Typical issues frequently documented include
indicators that are not attributable, readily quantifiable, or are set “too high” or “too low”
(i.e., PDO indicators that are project outputs or related to higher level objectives). In
designing the M&E system, it is important to keep in mind the indicators that appear as
intermediate outcomes from the standpoint of the PFM program may be legitimate PDO
outcomes from the standpoint of the project. For example, in the case of a FMIS, the
percentage of transactions being processed through the system is a good proxy for
transparency and accountability, as is the share of public procurement not subject to special
procedures (i.e., sole-sourced or negotiated contracts). On the other hand, PEFA indicators
need to be used with caution. These indicators and their change over time may provide good
indication of progress in PFM. However, as evidenced in this assessment and elsewhere, they
are imperfect indicators for many operations because of the required timing and measurement
lags. An indicator calculated at project’s end is based on data that may be two years old and
therefore would not capture improvements during the last one to two years. Similarly, there is
a need for at least two observations for the period just preceding project approval and at
closing.
9.5 Periodic suitably designed standalone assessments offer complementary
information to that provided by indicators. Impact or independent assessments are rarely
included within the design of PFM operations, even though they too provide invaluable
information on efficacy. There seem to be two reasons for this: (i) such assessments may be
seen as costly in terms of financial and human resources and a source of distraction by the
implementation team without commensurate benefits; and (ii) they are not considered at the
design stage and not retrofitted into the project M&E during implementation. The issue of
cost and benefit of good quality M&E goes beyond the scope of this report, which restricts
itself to noting that some complementary assessment appears warranted in all cases. The
principal approaches seen in various operations are:
Periodic independent evaluations. This approach was an integral part of M&E in the
Cambodia operation. It was undertaken about every two years and aimed to identify
bottlenecks and suggest actions to address them. To maximize their usefulness, these
evaluations should be not only at the program level, but also at the project level, and
their recommendations proactively taken on board by government and the PMU as
well as the Bank. They also may provide key inputs to the mid-term review and ICR.
53
Another type of study may be useful for operations aimed at supporting improved
service delivery and decentralization. Expenditure tracking studies (typically
undertaken in the social sectors and agriculture) may provide answers to questions
such as “is the flow of fund to service delivery centers better,” which in turn reflects
improved PFM.
Specific assessments. An important set of question to be asked at the end of capacity
building activities concerns include: (i) was the training, study tour or other capacity
building activity (e.g., manuals, draft policy papers) useful, and what evidence is
there of this; and (ii) are trained civil servants still working in government, and if so,
in a capacity where the acquired skills are still utilized? The questions may be largely
answered through a tracer study, such as the one undertaken under the Malawi PFM
project. The MDTF II project provided an interesting experience related to the first
question involving post-training tests being administered and the top performers
receiving an award and the opportunity for advanced training.
Qualitative assessments. This is a commonly used approach, based for instance, on
perception studies, which asks questions such as: (i) to civil servants, is your work
environment better thanks to the operation; and (ii) to users of government services,
have public service improved and in which way?
Use of PEFA. PEFA indicators provide a useful way to measure progress in PFM
reform. They can be especially useful for assessments undertaken after the operation
has been completed for over a year, especially when they provide both a baseline and
an end-of-project metric, as was the case for Cambodia. However, their use is more
limited as M&E of PFM operations. Timing is typically unsuitable—even if
undertaken at the end of project. The data on which the PEFA indicators are based
related to the previous two years and would not capture project contributions, as in
the case of both Vietnam operations. Furthermore, there are certain limitations to
PEFA assessments, and their results need to be interpreted with some caution.41
9.6 Modern information technology and social media may act as key complements to
project level M&E. Modern technology may offer the possibility of cost-effective gathering
of information on PFM that is not yet used in World Bank operations and would not have
been possible prior to the digital age and modern telecommunication. The Vietnam
assessment identifies an example of effective use of social media by both the government and
independent commentators to disseminate information pertaining to the budget.
PFMRP
9.7 Design. At time of project approval, the results framework was based on a logframe,
which presented the chain of logic from inputs to output to outcomes to higher level
objectives (World Bank 2003a). The only provisions in project design with a bearing on
M&E were periodic supervision and the MTR, the CTA position and institutional
responsibility to monitor indicators and report delegated to the PMU by the Steering
Committee (World Bank 2003a, 16). There was no provision in the original project design to
undertake any type of qualitative or quantitative assessments along the lines described above,
and none was undertaken during implementation.
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9.8 The original results framework was a weak part of project design. Largely, the
indicators were related to activities and objectives, many with good attribution. Seven clearly
defined higher level (CAS) indicators might have also served as PDO indicators, even if
attribution would have been partial. This reflected the fact that that the higher level subgoal
was closely associated (and in some way better stated) than the PDO. Three PDO indicators
suffered from various degrees of deficiency, including imperfect mapping with objectives
(there were more objectives than indicators) and, most important, the absence of baselines
and targets:
PDO Indicator 1: Accuracy, timeliness, relevance, transparency, and compliance with
international best practices in budget execution and reporting at each level of
government. The PAD does not explain how the indicators would be measured. In
any event, the goal of conforming to international best practice would be hard to
measure (e.g., would it mean an “A” rating for most PEFA indicators) and more
ambitious than the PDO statement whereby various aspects of PFM would be
strengthened.
PDO Indicator 2: Better planning of the state budget and the Public Investment
Program to achieve the growth and poverty reduction goals set out in the original
government strategy (subsequently SEDP). Conceptually, this indicator was
associated with project activities, notably the MTEF, but its target was unspecified.
For instance, taking into account recurrent implications of public investments would
have been important.
Greater fiscal sustainability through improved and more integrated recording of
external and domestic public and publicly guaranteed debt, improved capacity to
monitor SOE liabilities, and improved ability to assess associated fiscal risks. This
indicator was also related to activities under the project. However, as events
demonstrated during the late 2000s to early 2010s, it was also affected by external
factors.
9.9 The 17 output indicators were related closely to components. However, they included
targets for achievement dates that were unrealistic (mostly 2004 to 2006). Most, if not all,
were readily measurable without reinterpretation.
9.10 The 2011 amendment to the credit agreement changed the results framework. It left
the higher level and PDO indicators, but modified intermediate outcomes. The target dates
were thus modified and a few new indicators were added. However, these changes came late
in the implementation process and did not fully address the need to simplify the PDO and the
results framework.
9.11 Aside from indicators, there were no ad-hoc studies to assess project impact. For
example, a tracer study of beneficiaries of training would have been helpful (this also applied
to MDTF II). It should be noted that tracking studies in one or more sectors may not yield
significant information given that the relevant PEFA indicator PI 23 is rated “A.”
9.12 Implementation. The implementation of M&E was partial, as intermediate outcomes
were not reported in the ISRs, even though they provided useful goalposts.42 However,
according to the ICR, this information was regularly compiled and monitored by the MOF.
The shortcomings in the results framework were pointed out to the task team by the
management unit, but not addressed, notably at mid-term review or when processing the
55
additional financing. A PEFA was prepared in 2013, with the support of the MDTF II
project. This was a useful exercise as it identified PFM issues at the time (2011–2012) but
was unable to capture project activities such as the TABMIS coming on line. As a result, it
does not allow for the measurement of project outcomes at closing.
9.13 Utilization. According to the ICR, the M&E data were effectively used to steer
project implementation. As a result, certain activities were reoriented or dropped.
Nevertheless, some questions remain over how well M&E information was used—other than
lack of monitoring of intermediate outcomes in ISRs. For instance, setting up a TSA by 2004
was an initial project objective that kept slipping. However, this did not appear to have
resulted in greater urgency being given to implementing this measure. Furthermore, given the
difficulties encountered, the profile of this policy action could have been raised by including
it within the PRSC agenda. This was eventually done in 2014 through the EMCC2 (see
appendix B). Since then, EMCC-3 was instrumental in facilitating the resolution of
disagreement between the MOF and the CB on the collateral requirements on Treasury’s
participation in the interbank payment system (IBPS) to enable full roll-out of TSA to all
branches of CB.
9.14 Other. Aside from the formal M&E process, it appears that social media is being used
widely and effectively as a means to communicate and provide feedback on government
activities in general and more specifically PFM. Box 9.1 summarizes the relevant
information.
Box 9.1. Social Media Monitoring of Government Finances through Facebook
Government Facebook page: https://www.facebook.com/thongtinchinhphu/
Budget transparency: https://www.facebook.com/todocabi/
Views of taxpayers: https://www.facebook.com/groups/Gocnhinnguoidongthue/
Budget allocation and planning processes:
https://www.facebook.com/quyentiepcanthongtin/?fref=ts
The government’s Facebook page is followed by more than 60,000 people; the one on budget
transparency by some 43,000 people.
9.15 In view of shortcomings in all dimensions, M&E for the project is rated Modest, even
though increased use of social media may have been a partial substitute for monitoring
overall progress in the area of PFM outside the project (and MDTF II) purview.
MDTF II
9.16 Design. The PAD candidly recognized the difficulties with setting up an appropriate
M&E system for this demand-driven operation that would fund activities specified in
successive implementation plans. This requires a bottom-up M&E that bases expected
outcomes on results from yet unknown subprojects. A deterministic M&E is impossible to
define under such circumstances. One approach would be to formulate results in terms of
outputs (e.g., so many studies and training activities), which does not capture impact. The
approach put forward in the PAD is more ambitious, unrealistically so, even though it
explicitly recognizes the measurement and attribution difficulties by defining an indicative
56
framework: “given the flexible nature of the project, the results framework at this stage could
only provide indicative outcomes and indicators, which was built on the overall objectives of
PFM reform in 2006–2010 in related strategies, the Single Strategy Document (SSD)”
(World Bank 2010). It was also expected that “a pilot and baseline Public Expenditure and
Financial Accountability (PEFA) assessment will be conducted in 2010 and a follow-on
assessment would be conducted at the end of the project to allow measuring progress.” In
practice, an end-of project PEFA would only measure the results one to two years prior to
closing.
9.17 The outcome indicators included in the PAD results matrix were thus aligned with the
overall objectives of the PFM program. Attribution of changes at that level to small
subprojects averaging a few hundred thousand dollars was problematic. The matrix also
included 47 intermediate results—some of which were potentially legitimate PDO outcomes
while others were simple outputs. In any event, these results were too numerous.
Furthermore, many of the indicators lacked baselines while others were not readily
measurable. The original design was thus quite weak.
9.18 The task team recognized the shortcomings in the original results matrix, which was
overhauled following the MTR by aligning it more closely with project activities—most of
which were known by then. This pragmatic approach was appropriate even if the
modifications were insufficient. The revised results matrix reduced the number of indicators.
Three new PDO indicators were included. All suffered from lack of clarity or measurement
problems and lack of baselines. For instance, attribution of improved revenue mobilization to
the project would be weak given the dominance of external factors such as the structure of
growth. The original intermediate outcomes were replaced by 15 results, which were largely
both attributable and measurable. These results were aligned with the reduced number of
components.
9.19 Arrangement for results monitoring included timing of data collection, source of data,
and strengthening of the MOF’s capacity to collect and analyze data (World Bank 2010). The
need for analytical work to complement M&E, with specific reference made to two PEFAs.
9.20 Implementation. The implementation of M&E was initially uneven but improved
over time. On the Bank side, annual standard reporting of results, to the extent data were
available and indicators lent themselves to being reported, started with the first ISR issued in
2010. The formulation of the two implementation plans helped determine the series of
activities to be funded, each with their own timetables and goals, which facilitated the
restructuring of indicators based on the aggregated revealed demand from approved
subprojects. This also allowed for monitoring of output and process-oriented results at the
subproject level. In addition, a PEFA study was completed in 2013, which provided
stakeholders with important information on the state of PFM in Vietnam. However, the
PEFA data pertained to early 2010s and provided neither a baseline for the project nor a good
indication of the situation at its closing.
9.21 The most important aspect of M&E implementation was not necessarily at the broad
project level, but rather what was being done at the subproject level. Aside from the ultimate
goal that was set for most of these (e.g., law prepared, strategy formulated and adopted, or
some aspect of PFM becoming more efficient), there were experiments with novel
approaches. A noteworthy case based mission interviews concerns the training provided
57
under a subproject. A typical question associated with training is whether there is good
retention. To promote this goal and test the efficacy of training, the relevant managers
decided to test participants on their knowledge, which was apparently high overall. They
took this approach a step further by formally recognizing a handful of those who performed
best in the test and giving them the opportunity to take more advanced training (ultimately
increasing the likelihood of their promotion).
9.22 Utilization. The formal M&E was used to monitor revised input,43 output, and
outcome indicators. Use of M&E data improved with better quality of reporting. However,
ultimately the strength of the M&E was not its formal set-up in project documents but how
subproject information was used to steer it toward specific outcomes. This information was
subsequently used to bring various activities to conclusion, and its availability was most
useful in the preceding assessment of efficacy.
9.23 Despite weaknesses in how project results were measured at the aggregate level,
project stakeholders set up a subproject-level M&E system that was both effective and
useful. Therefore, project M&E, while unconventional, is rated substantial.
10. Lessons
General
10.1 An evolving project level M&E may be a good substitute for a formal one that is
pre-set at appraisal. This can be the case when the iterative, demand-driven nature of the
activities does not allow clear measurable objectives to be set from the outset. Also
approaches, such as use of social media, may be informative and cost-effective. Finally,
standalone studies and assessment provide important complements to results-based M&E.
10.2 Outcomes for PFM operations are difficult to measure at closing. The Vietnamese
cases show how ongoing policy actions take time to mature as do systems. In this instance,
project outcomes became fully apparent in early 2016. In cases elsewhere, a number of
factors including poor governance may undermine the initial results. Even though periodic
PEFA assessments are not suitable as M&E for operations because of lags in indicators, they
can provide useful information on PFM program progress over time.
10.3 PFM reforms need decades to complete. Vietnam is well into its second decade of
reform. Both the government strategy and actions needed to reach the higher level objective
of good governance show the need for this effort to be sustained into the 2020s. In this
context, continued effective provision of financial and, more importantly, knowledge by
development partners, will be needed. Strong donor harmonization and coordination have
been enabling factors so far. Coordination has become more important now that some
partners are no longer participating in the follow-up to the MDTF under preparation,
providing separate support instead.
10.4 The funding of operations may not be commensurate with their impact.
Significant results were attained under MDTF II even though the grant amount was small.
The supervision resources devoted to the project were large compared to disbursements
because they underpinned an important policy and institutional dialogue. The World Bank
correctly continued to support project implementation, even at a time were difficulties were
58
experienced. On the government side, capacity built was sustained and, together with
substantial ownership, resulted in actions being continued beyond the timeframe of the
project.
10.5 TA operations that are initially focused on a single ministry may have a greater
chance of success. Clarity in ownership and leadership of the activities by the MOF, which
is the leading institution in PFM, was essential and avoided overcomplicated coordination
mechanisms in the case of MDTF II. However, future PFM reforms will inevitably have to
cover multiple entities and would need to ensure activities are well sequenced and
coordinated.
FMIS (TABMIS)
10.6 Strong and sustained government and MOF commitment is essential. Since these
projects can take 7–10 years or longer for completion, it is necessary to maintain this
commitment over a long period, which can extend beyond an election cycle. This
commitment can be achieved better if projects are framed as public expenditure management
systems reform, rather than just accounting systems reform. In Vietnam, government support
was particularly important to address project-staffing issues, resolve business processes
issues, and tackle interorganization issues.
10.7 Comprehensive FMIS implementation as in Vietnam takes about 10 years to
complete. These projects are characterized by slow disbursement rates over the initial years,
which are spent in systems design, testing and piloting. The disbursement profile needs to be
adjusted accordingly.
10.8 Continuity in the project team contributes to success. There was stability on both
government and Bank side, and key members of the team that designed the project remaining
engaged in its implementation for the first few years ensured an effective transfer of know-
how to field-based and other Staff.
10.9 Systems sequencing is key. The TABMIS implementation in Vietnam illustrates
how project implementation for similar systems needs to be phased44 to achieve significant
outcomes such as good budgetary control and cash management early in the Project. It is
necessary to first implement modules to cater to core budget execution processes and
processing of payments and receipts transactions, across government, before going on to
other noncore elements, such as fixed assets/inventory management, human resource or fleet
management.
10.10 Systems deployment strategies should make sure that a large part of the budget
is covered from the outset. A major part of the budgetary resources should be subjected to
ex-ante budget and cash control so that meaningful fiscal control and cash management is
possible at an early stage in the deployment. A deployment across treasury offices through
which these transactions are routed, may be sufficient for this purpose.
10.11 Spending unit access is a challenge in the use of treasury centric systems. The
lack of spending unit access inhibits ownership at the line ministry and end-user level. This
often leads to line ministries developing independent financial systems for their own
management use, as in the case of Vietnam. Avoiding this outcome requires that once the
59
basic treasury system has been implemented and is operating in stable mode, the large
spending units be empowered and made responsible for the bulk of transactions.
10.12 Availability of specialized IT expertise within the Bank project team is critically
important to assure the quality of design and supervision of the projects that support
development of complex IT systems. The Bank team needs to have experienced specialists
on board or available to advise the client on important technical issues during the design and
implementation phases. These specialists also need to be familiar with procurement practices
and procedures for IT related procurements and the World Bank rules under which they will
need to be applied.
10.13 Staff in the implementing agencies should recognize the inevitability of change. Resistance often comes from staff responsible for operating the legacy systems as well as
those who are used to doing their regular work in a given way and are reluctant to change.
MOF management has a major role to play.
10.14 The design of the main consultancy package has proven to be a significant
bottleneck for TABMIS implementation. The consultancy package should be designed to
ensure that appropriate consulting help is available throughout the various stages of the
project.
10.15 Not all needs may be foreseen during the project's preparation and original
design. The number of system users of TABMIS increased threefold between design and full
rollout and had to be accommodated.
1 The conclusion of the IEG assessment of progress in the PFM area and its attribution to budget support
operations was not sanguine: “During implementation of PRSC there were some important achievements in
PFM, including establishment of a modern treasury management system (TABMIS), strengthening of external
audit functions, and a PEFA exercise conducted in 2012/13. However, achievements in internal auditing and
reporting of expenditures were less noteworthy. PFM in Vietnam continues to suffer from long-standing
problems such as nonconformity of financial reporting with international standards, lack of multi-year fiscal
projections, carry-over of expenditures to following years (these expenditures also lack of economic and
functional classification), and lack of reporting at the commitment stage that limits the efficiency of TABMIS.
The CPIA subrating for the quality of budget and financial management was lower in 2012 than in 2006.” The
present report denotes substantial progress in most if not all areas because of recent policy actions.
2 This internal note only uses end-2014 data and is being updated to reflect more recent information.
3 See World Bank (2010, 18–22) and IEG (2015) for a more detailed analysis of the 2007–2013 experience.
4 This assessment does not make a judgment on the appropriate level of debt other than to note that
sustainability is not only a function of debt to GDP, but also interest rate on the debt, and whether or not
incremental borrowing is for activities with high rates of rates of return.
5 Budget data were made available to IEG by the Country Management Unit.
6 The 2015 IEG evaluation of budget support operations was unable to obtain information on this point.
7 The objective includes other areas such as public administration reform and anti-corruption.
8 See World Bank (2003a) for details.
9 As noted in the sustainability section, actual requirements are more than double and are adequately
provisioned by government.
10 Allocation is only by disbursement category.
60
11 These resources were first allocated to a parent trust fund and subsequently to the project. The parent multi-
donor trust fund arrangements are described in World Bank (2010).
12 A question asked later in this report is whether greater collaboration with the PFMRP PMU would not have
been helpful.
13 One that would improve the scores, for instance PI8, PI9, PI18, PI20, PI22, PI24, and areas such as
comprehensiveness and transparency, predictability and control, and fiscal performance.
14 Figures C1–C3 show how the system relates to various core PFM functions.
15 The piloting of the Medium-term Fiscal Framework and the Medium-term Expenditure Framework from
2005 - 2007 was launched in 04 sub-national governments including Hanoi city, Ha Tay, Binh Duong and Vinh
Long. In 2008, Ha Tay province was merged into Hanoi city, then the pilot was in 3 provinces.
16 It is beyond the scope of this review to assess this new law. But according to World Bank staff interviewed, it
covers most of the issues that were discussed with government upstream to its preparation. As also noted
earlier, the project contributed to certain aspects of the law.
17 Some donors such as EU have stringent rules concerning the need to disburse funds within a specified period.
However, their definition of disbursement varies somewhat from the World Bank’s. Specifically a contract once
signed is considered as disbursed and is then subject to a grace period of about two years, during which service
may be provided.
18 It should be noted that the PEFA fails to capture the impact of the TABMIS and recent reforms. Nevertheless,
some of the “C” and “D” ratings would not have been affected substantially and will need to be tackled through
additional actions.
19 This issue falls outside the scope of this assessment.
20 “Self-liquidating” risks associated with project implementation are not cited.
21 The risk is being reduced through the support of the Ministry of Finance (the State Treasury) for the use of
TABMIS by sector ministries, including user training; central help desk to support via email; hotlines; regular
direct phone calls to understand obstacles; and to provide on-site supports (for difficult issues) or off-site
support (for simple issues).
22 See appendix C for details.
23 According to transparency international (transparency.org https://www.transparency.org/country/#VNM)
based on its perception index, corruption in Vietnam remains a significant problem. In 2015, the country’s
ranking was 112 out of 168. This ranking reflects limited improvement over time. In 2002, Vietnam was ranked
85 out of 102, and in 2008 its raking was 121 out of 180.
24 Not rated in this evaluation as it is a country level risk that would need to be assessed in the Country
Partnership Strategy.
25 For instance, development policy [adjustment] operations circa 2000 began to provide reference to the
adequacy of public financial management and procurement systems. This judgement as well as more traditional
assessments of the macroeconomic framework and allocative consideration of public expenditure provided the
cross-cutting basis for budget support. Subsequently, PFM reform became a typical pillar of PRSCs and some
other general DPOs.
26 “A peripatetic rather than resident CTA should be appointed to assist in implementation. The Director of the
State Budget Department in preparing the MTFF and in coordinating the preparation of MTEFs in pilot sectors.
This Chief Technical Adviser will spend some three months per year in Hanoi for three years, making
approximately four visits per year to review progress at critical junctures and agree next steps. The CTA's
primary responsibility will be to support the development of the MTFF” (World Bank 2003a).
27 Cr. 1951 UG. Even though the World Bank’s external site states that the assessment may be disclosed, it was
not readily available. The internal document was consulted for the purpose of this report. The assessment
concludes that the [demand-driven] project outcome was highly satisfactory, in large part because of the
flexibility to finance studies, activities, and other inputs as the need arose. It was strength of the design that
considerable flexibility was allowed to the project managers to modify project objectives and instruments
61
during the course of the projects.” A key lesson worth noting here was that “well-chosen and well-managed
long-term expatriate advisers had in many instances been effective in fostering capacity building.”
28 However, future actions should focus on budget preparation and execution capacity in the line ministries.
29 The report was called Project Status Report until 2004 and ISR thereafter. Aside from the name change, the
content and coverage of these reports changes twice during the implementation period of the PFMPR. The first
change took place when the ISR format was adopted. The ISR presentation was further changed in 2010,
notably through the introduction of a detailed risk assessment framework.
30 Downgrading of ISR ratings was reportedly discouraged by reform minded senior civil servants who feared
that this would undermine their credibility needed to fight internally the reforms.
31 The MOF team sought to develop a COA to cater to the needs of SUs which in Vietnam are operating with
modified accrual accounting. Due to complexities of the budget system in Vietnam (being unitary, covering all
four levels of the government), the MOF decided to drop this idea as they wanted to have proper cash
accounting in TABMIS first. That was why the COA issue had been raised in a number of ISRs as the pending
issue. To the credit of the State Treasury, when the COA for TABMIS was agreed, they implemented the
upgrade of their legacy system to operate with the TABMIS COA , which helped with data conversion during
TABMIS roll-out.
32 Support subsequently provided to this area is discussed elsewhere under the MDTF II.
33 At time of the MTR, the Bank was no longer designing projects and related M&E based on logframes. M&E
is discussed more extensively in the relevant section of this report.
34 The present assessment raises these issues so that if necessary they may be studied in a broader context if still
unresolved. However, looking more broadly into how the Vietnam portfolio was managed and Bank-UN
relationships clearly falls outside this review.
35 Arguably, implementation should have also been downgraded to moderately unsatisfactory.
36 Much of the analysis in this paragraph is from the Implementation Completion and Results Report (World
Bank 2014b), validated by the consistent stakeholder feedback received by the mission.
37 For instance, as was done decades earlier in Korea through the Korean Development Institute, which
contributed to the “Korean Miracle.”
38 For example, the Russia—Treasury Development Project.
39 More recent projects are either ongoing or have not yet been evaluated.
40 Cambodia, Malawi, and Zambia (completed) and Ghana (ongoing).
41 Various sources, including the IMF, note limitations notably due to the fact that PEFA does not provide the
basis for prioritizing reforms. Additional analysis may be found in a recent report from the Overseas
Development Institute (Hadley and Miller 2016).
42 Following change in the report format, indicators were introduced in ISR #5. It only shows the three PDO
indicators. The entry for intermediate outcomes reads “n/a – old format PAD” suggesting that there were not
any. However, the logframe include a number of useful intermediate outcomes.
43 The ICR states that this monitoring allowed dropping subprojects that could not be completed before closing,
while the PMU was able to identify savings that could be redeployed elsewhere (World Bank 2014b).
44 This strategy was also employed in Kazakhstan, Pakistan, and Russia where a focused effort on Core budget
execution processes from the start has yielded good results with a minimum of wasted time and effort.
62
References
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Feedback on State Budget Information in the Public Domain. Washington, DC: World Bank
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transparency-review-analysis-stakeholder-feedback-state-budget-information-public-domain.
Government of Vietnam. 2013. Vietnam Public Expenditure and Financial Accountability (PEFA): Public
Financial Management Performance Assessment July 2013.
http://www.pefa.org/en/assessment/files/1205/rpt/9497
Hashim, A., and Bill Allan, 2001. Treasury Reference Model. Washington, DC: World Bank.
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Hadley, Seird, and Mark Miller. 2016. PEFA: What Is It Good for? London: Overseas Development
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https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0ahUKEwi9pKT
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IEG (Independent Evaluation Group). 2005. Capacity Building in Africa. Washington, DC: World Bank.
———. 2015. Project Performance Assessment Report: Vietnam. Report No. 96203. Washington, DC:
IEG.
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Washington, DC: IMF.
Irwin, Timothy, and Tanya Mokdad. 2010. Managing Contingent Liabilities in Public-Private
Partnerships. Washington, DC: World Bank.
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World Bank Support. Washington, DC: World Bank.
https://openknowledge.worldbank.org/handle/10986/7468.
Wescott, Clay G., Nguyễn Hữu Hiếu, and Vũ Quỳnh Hương. 2009. Public Financial Management: How to
Deliver Better Value for Money in Vietnam’s Public Administration System? Hanoi: United
Nations Development Programme.
World Bank. 2003a. PFMRP, Project Appraisal Document. Washington DC: World Bank.
———. 2003b. Country Assistance Strategy. Washington, DC: World Bank.
———. 2005. Cross Sectoral Issues. Vol.1of Vietnam Managing Public Expenditure for Poverty
Reduction and Growth. Washington, DC: World Bank.
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expenditure-poverty-reduction-growth-public-expenditure-review-integrated-fiduciary-
assessment-vol-1-2-cross-sectoral-issues.
———. 2006. World Bank. 2006. Vietnam—Aiming High: Vietnam Development Report 2007.
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development-report-2007
———. 2007. Country Partnership Strategy. Washington, DC: World Bank.
———. 2010. MDTF II Project Appraisal Document. Washington, DC: World Bank.
———. 2012. Country Partnership Strategy. Washington, DC: World Bank
———. 2014a. PFMPR Implementation Completion Report. Washington, DC: World Bank.
———. 2014b. MDTF II Implementation Completion Report. Washington, DC: World Bank
63
———. 2014c. Vietnam Fiscal Transparency Review. Washington, DC: World Bank.
———. 2015. Vietnam—Sixth-Tenth Poverty Reduction Supports Credit Project; Second Phase of the 135
Programs Supports Credit Project; and One-Two Public Investment Reform Project. Washington,
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sixth-tenth-poverty-reduction-supports-credit-project-second-phase-135-programs-supports-credit-
project-one-two-public-investment-reform-project.
U.S. Department of State. 2015. Fiscal Transparency Report. Washington, DC.
http://www.state.gov/e/eb/ifd/oma/fiscaltransparency/243692.htm.
64 APPENDIX A
Appendix A. Basic Data Sheet
VIETNAM: MULTI-DONOR TRUST FUND FOR PUBLIC FINANCIAL
MANAGEMENT MODERNIZATION. (TF-94240)
Key Project Data (amounts in US$ million)
Appraisal
estimate
Actual or
current
estimate
Actual as % of
appraisal
estimate
Total project costs 5.78 5.39 93%
Loan amount 7.19 5.10 71%
Cofinancing - - -
Cancellation - 2.09 -
Cumulative Estimated and Actual Disbursements
FY10 FY11 FY12 FY13 FY14
Actual (US$M) 0.50 0.93 2.48 3.38 5.10
Date of final disbursement: May 1, 2014
Project Dates
Original Actual
Initiating memorandum 01/22/2008 02/29/2008
Negotiations 05/05/2009 05/05/2009
Board approval 09/15/2009 04/01/2009
Signing 06/02/2009 06/02/2009
Effectiveness 09/07/2009 09/07/2009
Closing date 06/30/2011 12/31/2013
APPENDIX A 65
Task Team Members
Name Title Unit Responsibility/
Specialty
LENDING/GRANT PREPARATION
Minh Van Nguyen Senior Economist (TTL until
Oct. 2008)
EASPV TTL
Quyen Hoang Vu Economist (TTL from Oct. 2008) EASPV TTL
Hisham Abdo Kahin Senior Country Lawyer Counsel
Cung Van Pham Financial Management Specialist EASFM Financial Mgt.
Nguyen Chien Thang Senior Procurement Specialist EASRP-HIS Procurement
SUPERVISION/ICR
Quyen Hoang Vu Economist (TTL from Oct. 2008 to
Sept. 2011)
EASPV Task Team Leader
Yasuhiko Matsuda Senior Public Sector Specialist EASPW Public Sector Mgt.
Quynh Xuan Thi Phan Financial Officer GEFOB Financial Mgt.
Tuyet Thi Phung Program Assistant EACVF Task Assistant
Nguyen Chien Thang Senior Procurement Specialist EASRP-HIS Procurement
Habih Rab Senior Economist (TTL from Sept.
2011 until July 1, 2013) EASPV
Task Team Leader
Minh Van Nguyen Senior Economist (TTL from July 1,
2013 until ICR) EASPV
Task Team Leader
Phuong Anh Nguyen Research Analyst EASPV Operation Support
Hanh Thi Huu Nguyen Financial Management Specialist EASFM Financial Mgt.
Nguyen Hoang Nguyen Procurement Specialist EASR2 Procurement
Khanh Linh Thi Le Program Assistant EACVF Task Assistant
Deepak Mishra Lead Economist EASPV LE/Manager
Sandeep Mahajan Lead Economist EASPV LE/Manager
Vu Thi Anh Linh Program Assistant EACVF Task Assistant
Hisham Abdo Kahin Senior Country Lawyer Counsel
Staff Time and Cost
Stage of Project Cycle Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Supervision/ICR
FY10 11.93 36.60
FY11 24.73 75.00
FY12 35.27 245.52
FY13 3.17 30.77
FY14 35.13 113.46
Total: 111.23 501.35
66 APPENDIX A
VIETNAM: PUBLIC FINANCE MANAGEMENT REFORM PROJECT (IDA-EY670 IDA-48630 TF-50988)
Key Project Data (amounts in US$ million)
Appraisal
estimate
Actual or
current estimate
Actual as % of
appraisal estimate
Total project costs 71.45 87.72 123
Loan amount 71.45 82.72 123
Cofinancing - - -
Cancellation -
Cumulative Estimated and Actual Disbursements
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Appraisal
estimate
(US$M)
1.04 0.02 3.78 4.71 6.10 5.71 10.17 16.29 23.07 3.80 0.00
Actual
(US$M)
1.04 0.02 3.78 4.71 6.10 5.71 10.17 5.51 11.32 14.81 5.99
Actual as % of
appraisal
100 100 100 100 100 100 100 49 34 0.00
Date of final disbursement: May 1, 2014
Project Dates
Original Actual
Initiating memorandum 04/22/2002 02/04/2002
Negotiations 01/05/2004 03/04/2003
Board approval 05/27/2004 05/22/2003
Signing 06/06/2003 06/06/2003
Effectiveness 09/04/2003 09/04/2003
Closing date 02/28/2009 10/31/2013
Task Team Members
NAME TITLE UNIT
APPENDIX A 67
Ed Mountfield Manager (TTL until June 2005) OPSPQ
Gloria M. Elmore Temporary EASPR
Robert J. Gilfoyle Sr Financial Management Specialist EASFM
Hung Viet Le Sr Financial Management Specialist EASOS
Minh Van Nguyen Senior Economist (TTL June 2005-
August 2009 and between Aug. 2011-
Dec.2011 )
EASPV
Hoang Xuan Nguyen Procurement Specialist EASR2
Cung Van Pham Sr Financial Management Specialist EASFM
Quynh Xuan Thi Phan Financial Officer GEFOB
Tuyet Thi Phung Program Assistant EACVF
Ronald Points Consultant EASPC
Ramesh Sivapathasundram Lead Information Officer TWICT
Nguyen Chien Thang Senior Procurement Specialist EASRP-HIS
Jennifer K. Thomson Chief Financial Management Off OPSOR
Quyen Hoang Vu Economist (TTL since August 2009 ) EASPV
L. S. Christine Wong Shui Wan Operations Officer EASPW
Cem Dener Senior Public Sector Specialist PRMPS
Anna L. Wielgorska Senior Procurement Specialist EASR1
Bruce Pollock ICT System Consultant EASPV
68 APPENDIX A
Staff Time and Cost
Stage of Project Cycle Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY02 38.00 261.55
FY03 38.00 135.28
FY04 14.00 57.05
FY05 5.00 28.91
FY06 4.00 22.87
FY07 2.00 15.69
FY08 0.00 0.00
Total: 101.00 521.35
Supervision/ICR
FY04 21.00 57.13
FY05 40.00 111.27
FY06 14.00 36.28
FY07 16.00 37.43
FY08 27.00 57.50
FY09 10.00 0.00
FY10 17.20 87.80
FY11 20.40 76.30
FY12 16.42 63.70
FY13 22.00 65.90
FY14 10.00 67.50
Total: 214.00 660.80
69
Appendix B. DPO PFM Related Prior Actions
Planning Process
2007 PRSC
6
Allocate state capital expenditure transparently, using criteria like population, poverty and ethnicity – NB:
Also related to public investment and social protection
2008 PRSC
7
Establishment of clear criteria for the selection of public investment projects and of mechanisms for their
financing and monitoring. NB: Also related to public investment
Policy measures not included as prior action
2007
-12
PRSC
6-10 Adopt regulations for master and regional plans specifying issues, process, agency responsibility, and
require disclosure
Establish list of indicators, data sources and reporting mechanism for monitoring of SEDP
Establish a legal framework for strengthening urban planning and urban infrastructure management
PFM
2007 PRSC 6 Disclose results of audits conducted by the State Audit of Vietnam (SAV) and its annual audit plan
2008 PRSC-7 Issuance of regulations regarding content and timing in the disclosure of reports by State Audit of
Vietnam, including audit reports of individual entities.
2009 PRSC 8 Formulate a public debt management law, consolidating the management of domestic and external debt.
2010 PRSC 9 The Recipient has formulated a regulation for development and implementation of internal audit of public
sector agencies and defining organizational responsibilities.
2010 PIR 1 The Borrower, through MOF, has issued a Decision to align time of recording ODA funds in government
accounts with the timing of actual receipts and expenditures.
2011 PIR 2 The Recipient, through MPI, has issued a Circular, including technical guidelines, to implement the use of
electronic procurement (e-procurement) in pilot provinces and agencies.
2011 PIR 2 The Recipient, through MOF, has issued a Circular to mandate the sharing of independent audits of
financial statements of ODA-funded projects with MOF and SAV.
2011 PIR 2 The Recipient, through MOF, has issued a Circular to streamline payment procedures and clarify and
simplify payment-supporting documents for ODA-funded projects.
2012 PRSC 10 The Recipient, through MOF, has started an annual exercise of publishing the synthesis report based on
financial statements of state-owned economic groups and general corporations. NB: Also related to state
reform.
2013 EMCC 1 The Recipient, through Prime Minister, has issued Decision Number 958/QD-TTg dated July 27, 2012 to
strengthen the institutional framework for debt management and establish prudential debt thresholds for
medium-term fiscal sustainability.
2013 EMCC 1 The Recipient has issued Law Number 21/2012/QH13 dated November 20, 2012, amending Law Number
78/2006/QH11 dated November 29, 2006 on Tax Administration, to streamline procedures, introduce
advance pricing arrangements, increase risk-based management, and improve transparency.
2013 EMCC 1 The Recipient’s Government has submitted to the National Assembly Report Number 283/BC-CP dated
October 19, 2012, on the development investment status of 2012 and medium-term investment plan for
the period 2013-2015 to set medium-term capital expenditure priorities in the state budget and including
off-budget bond financing for 2013.
2014 EMCC 2 Government through Prime Minister, has issued Decision Number 689/QD-TTg, dated May 4, 2013,
approving a medium-term debt management program for the period 2013-2015
2014 EMCC 2 Government through National Assembly, has adopted the Amended Law on Procurement No.
43/2013/QH13to strengthen transparency and competition in public procurement.
2014 EMCC2 The Recipient, through State Treasury, has implemented the treasury single account
procedures in the Joint Stock Commercial Bank for Investment and Development of
Vietnam, and the Vietnam Joint Stock Commercial Bank for Industry and Trade, and
provided reports on the implementation.
Policy measures not included as prior action
2007-
12
PRSC 6-
10 Publish report on budget execution for current year and budget plan for forthcoming year, on an annual
basis
Issue regulations for periodic disclosure of external public debt and its composition
APPENDIX B 70
Implement regulation to guide the establishment and issuance of benchmark government bonds. NB: Also
related to Financial Sector
Consolidate administration procedures for all taxes into a single law, modernizing assessment and
enforcement methods. NB: Also related to PSD
Revise the investment laws to improve efficiency in state capital expenditures and strengthen the
management of public investment projects
Conduct public financial management reforms including commitment accounting, vendor management
and new chart of accounts
Adopt procedures for annual audit plan ensuring sufficient frequency and adequate provincial coverage
Strengthen the legal framework for taxing the use of non-agricultural land and the capital gains to increase
efficiency and equity, and dissuade speculation. NB: Also related to PSD
Legal Development
2007 PRSC 6 Establish separate legal, judicial, economic, and budget committees to strengthen NA’s supervisory role
Policy measures not included as prior action
2007-
12
PRSC 6-
10 Adopt policies to encourage the participation of non-state establishments in the delivery of public
services
Enhance the responsibility of enterprises vis-à-vis consumers and strengthen the handling of
consumer complaints
Develop effective legal framework on consumer protection
Public Administration Reform
2010 PRSC 9 The Recipient has issued a regulation and developed pilot schemes to strengthen competition, merit
orientation, and transparency in the recruitment, appointment, and promotion of civil servants.
2012 PRSC 10 The Recipient, through the Prime Minister has adopted a Public Administration Reform Master Plan for
2011-2020; and through MOHA, has started piloting a results-oriented monitoring and evaluation system.
Policy measures not included as prior action
2007-
12
PRSC 6-
10 Extend One-Stop-Shop (OSS) to all ministries and agencies and introduce inter-linked OSS to further
simplify administrative procedures
Adopt principles of competition, merit-orientation and transparency in the recruitment, appointment,
promotion and dismissal of civil servants
Dissociate civil service pay structure from minimum wage setting and widening the range of
minimum wages
Formulate common standards for IT applications and e-government interfaces at central and
provincial levels
Develop indicators for monitoring and evaluating the implementation of PAR and provision of public
administrative services
Public Investment
2010 PIR 1 The Borrower has issued a Decree to establish a consistent monitoring and evaluation framework for
public investment projects, including standardized monitoring tools.
2011 PIR 2 The Recipient, through MPI, has issued Circulars to establish standard templates for project monitoring
reports and to set up the required legal criteria for individuals and institutions to carry out investment
evaluation.
2014 EMCC 2 GOV through Prime Minister, has issued Directive Number 14/CT-TTg, dated June 28, 2013, to
accelerate clearance of capital expenditure arrears and report to the National Assembly the current status
and solutions going forward.
Dropped prior action
2011 PIR 2 The Borrower has submitted, for consideration by the National Assembly, a draft law on Public
Investment providing a common framework for all public projects.
Fighting Corruption
2007 PRSC 6 Operationalize Steering Committee against corruption with power to suspend high level officials if
suspected
71 APPENDIX B
2008 PRSC 7 Implementation of the asset declaration requirement with respect to senior officials and their immediate
family members, and application of penalties for non-compliance.
2010 PRSC 9 The Recipient has: (a) carried out annual procurement compliance and performance audits of projects
funded by the state budget; (b) made public findings of selected audits; (c) adopted a pilot procurement
code of ethics for participants; and (d) launched an open access electronic bidding system.
2012 PRSC 10 The Recipient, through GI, has developed a framework for monitoring progress on the implementation
and results of efforts to prevent and combat corruption.
2013 EMCC 1 The Recipient has issued Law Number 27/2012/QH13 dated November 23, 2012, amending Law
Number 55/2005/QH11 dated November 29, 2005 on Anti-Corruption and including stricter transparency
guidelines in areas and sectors most vulnerable to corruption.
2014 EMCC 2 Government has issued Decree Number 59/2013/ND-CP dated June 17, 2013, Decree Number
78/2013/ND-CP dated July 17, 2013, and Decree Number 90/2013/ND-CP dated August 8, 2013, to
regulate and guide the implementation of the Amended Law on Anti-Corruption, including increased
transparency, income and asset declaration of public officials, and accountability of public agencies and
officials.
Tax Reform
Policy measures not included as prior action
2007-
12
PRSC 6-
10 Establish single-window mechanism for businesses to cover registration, tax, and seal formalities in
selected provinces.
Simplify enterprise registration including by unifying tax and business identification numbers and
streamlining seal procedures.
Rationalize incentives related to Enterprise Income Tax and simplify tax procedures for household
businesses.
Consolidate administration procedures for all taxes into a single law, modernizing assessment and
enforcement methods.
2013 EMCC 1 The Recipient has issued Law Number 21/2012/QH13 dated November 20, 2012, amending Law
Number 78/2006/QH11 dated November 29, 2006 on Tax Administration, to streamline procedures,
introduce advance pricing arrangements, increase risk-based management, and improve transparency.
2014 EMCC 2 Government through National Assembly, has adopted the Amended Law on Corporate Income Tax to
establish competitive corporate income tax rates, clarify rules and regulations on transfer pricing, and
introduce provisions on deductible expenses.
2014 EMCC 2 Government through National Assembly, has adopted the Amended Law on Value Added Tax to: (a)
adjust the group of goods and services not subject to value added tax; (b) clearly specify the goods and
services subject to 0% value added tax rate; and (c) apply thresholds as appropriate.
72
Appendix C. TABMIS
Rationale for TABMIS
In the early 2000s the Government of Vietnam’s Financial Management Information Systems
were fragmented and had overlapping and conflicting functionality. Little attention was paid
to critical flows of information between system components and beyond the system. The end
result was lack of integrity in overall fiscal data, transparency and control. The problems
could be traced to weaknesses at two levels:
Institutional weaknesses
(i) The lack of a common accounting standard; at least three parallel standards existed
within Government in Vietnam: that of the State Treasury Department, that of the
State Budget Department and that used by spending units (which in turn was
inconsistently applied). Separate financial management information systems
operated in the State Budget Department, the State Treasury Department and
spending units.
(ii) Extra-budgetary funds, on-lent official development assistance and much
commune-level spending were not consolidated into the budget or recorded in the
Treasury Department's main accounting system. The lack of a fully consolidated
and integrated budget made it difficult to monitor total revenues and expenditures,
distorting perceptions of the true fiscal position, with potentially serious
consequences for fiscal stability. It made it impossible to assess how resources are
being allocated as a whole and to poverty alleviation in particular. It made it hard to
compare budget plans with budget out-turns. It also acted as an impediment to the
successful management of further devolution and delegation.
Technological weaknesses
Although the Treasury databases were a reasonably effective tool for controlling and
recording expenditure, the continued fragmentation and incompleteness of electronic data
recording and reporting resulted in laborious semi-manual consolidation of data from
multiple satellite databases. Consequently financial reporting was late and inaccurate. In
addition, outdated ICT hardware, software and weaknesses in telecommunications
infrastructure were also a major limitation.
These deficiencies contributed to the poor flow of budgetary information between provinces,
central financial agencies, central ministries, donors and the public. Central financial
agencies and ministries that would like to take stock of often highly decentralized spending
within their sectors were unable to obtain this information without great effort. Foreign
donors who would like to give or lend more by way of fungible budget support and support
for sector-wide programs found this hard to justify in the absence of reliable budget
management information and reliable fiduciary systems. Although by 2003 Vietnam had
made strenuous efforts to increase fiscal transparency, the availability of timely and high
quality data was a constraint.
73 APPENDIX C
Strengthening and integrating financial management information systems was therefore a
critical next step for Vietnam and required interventions at both the institutional and the
technological levels.
Institutional Reforms
The Government first moved to address the institutional weaknesses. The Public
Administration Reform Master Plan for the period 2001 to 2010 stated that Treasury
management will remain a central Government function and this was also clearly stated in
the new State Budget Law. Article 61 of the new State Budget Law designated the State
Treasury Department as the lead agency responsible for the financial management
information system. In addition, the Government committed to integrate the Treasury
accounting system, the budget accounting system and the spending units accounting system
within an integrated chart of accounts. Work was undertaken to identify and consolidate
extra-budgetary funds into the budget.
Thus, although Vietnam's budget planning processes were decentralized, budget execution
was firmly established as a responsibility of the State Treasury Department. The Treasury
operated through a network of Treasury offices exist at provincial and district levels, which
reported to the Central State Treasury Department.
Improvements in the Technological Infrastructure
In 1999, Vietnam's key fiscal agencies began to invest in a united information infrastructure
in their various agencies and in modernizing the hardware and software in use. The purpose
was to create a network backbone connecting individual departmental networks. In March
1999, the Minister of Finance approved the development of a State Budget database. As a
result Local-Area Networks (LANs) connected the key financial agencies (the Treasury
department, finance department, taxation department and customs department) in the
provinces. Wide-Area Networks (WANs) were progressively established in some of the
larger cities. Investment was undertaken to complete a national network backbone, which
would link these LANs and WANs. By the mid 2000’s this backbone would link Hanoi,
Danang and Ho Chi Minh City, and 58 of Vietnam's 63 provincial Treasury offices via leased
lines to this backbone. The 600 district offices would mainly use dial-up connections to their
respective provincial Treasury offices. Sufficient bandwidth was available for leasing as it
became necessary. Upgrade of desk tops and LAN environments were also planned, and
would be satisfactory for use with a new Treasury and Budget Management System.
These initiatives provided the basis of a sound and stable institutional and technological
infra-structure platform for implementing a modernized Treasury and Budget Management
Information System – TABMIS -- across central government and all provinces and districts.
PFMRP Component Related to TABMIS Description
The first and the largest component of the PFMRP envisaged the implementation of an
integrated Treasury and Budget Management Information System (TABMIS). A PHRD grant
immediately preceding the project financed Technical Assistance to develop the conceptual
design of the new system - TABMIS, including identification of functional user requirements
APPENDIX C 74
and documentation of technical specifications. For this the Government through a
competitive process contracted with Booz Allen and Hamilton (BAH) in January 2003 to
develop the technical and functional specifications for the new TABMIS system during the
preparatory phase of the project. The component included financing for:
A turn-key contract covering:
The procurement of a new TABMIS, including hardware, software, implementation
and integration services, training and change management services to be acquired
through a two stage ICB process. The solution would be designed by bidders to meet
functional user requirements and technical specifications precisely set out in the
Bidding Document prepared by the BAH consultants.
Installation and configuration of TABMIS in Treasury head office, MOF, MPI
and one pilot province: Treasury head office (which will house the central database
and be the repository of the "core" system) will form the first production
environment. The production environment will be tested here prior to the populating
the system with live data. The chart of accounts and other control data (security
profiles, banking controls, audit trails, data import and export capabilities, standard
report configuration, etc.) will be established and live data entry enabled. The
Ministry of Finance, Ministry of Planning and Investment and one pilot province
would then be connected to the central Treasury system.
Roll out to all Treasury offices in provinces and districts: Implementation would
then take place in a phased manner in all Treasury offices in provinces and districts.
This sub-component will be considered complete when TABMIS is functioning in all
Treasury offices and data communications between Districts and their Provinces and
between Provinces and Central Treasury are operating successfully.
Roll-out to Finance Departments and planning departments at provincial and
district levels: Implementation would then take place in Finance Departments and
planning departments at provincial and district level. At the completion of this sub-
component, all District and Provincial Offices of both the Treasury and the finance
departments would be operating on the new TABMIS and the legacy systems will be
de-commissioned.
Pilot implementation in selected large spending units: The Government, in
consultation with its consultants and with the World Bank, concluded that it would be
premature to attempt to integrate all spending units into TABMIS, so that they could
transact electronically with the Treasury. There are many tens of thousands of
spending units, and it would be a major further expense as well as a further logistical
challenge to integrate them all. This sub-component would support the pilot
integration of selected large spending units into TABMIS during the last phase of the
project.
Technical assistance for:
Procurement assistance and Independent Bid Evaluation: The component would
also finance the continued assistance of the consultants with procurement and
Independent Bid Evaluation.
75 APPENDIX C
Independent Validation and Verification (IV&V): The IV&V work would include
validating and verifying progress against specific acceptance criteria and sign-off
stages within the turn-key solution provider’s contract; advising the Government team
on progress; conducting post-implementation reviews at sample locations; providing
arbitration between the Government and the turn-key solution provider; and accepting
responsibility for escalating issues that threaten the successful outcome of the project
components and that local arbitration cannot resolve, through a contractually-
stipulated escalation path, until resolution has been achieved.
Training and change management: This involved the development and
implementation of a full and detailed strategy for change management and training. A
“training of trainers“ approach would be used to deliver training to an estimated
14,000 trainees in the State Treasury Department, the Ministry of Finance, the
Ministry of Planning and Investment and in provincial and district finance
departments and line agencies.
Supplementary technical assistance with financial management rationalization and
reform: As the Government implements TABMIS, additional technical assistance needs
would emerge. This sub-component would ensure that funds are available to finance such
inputs as they emerge. A major input would be to support the establishment of a Treasury
Single Account. The combination of TABMIS and the new inter-bank transfer system would
make a Treasury Single Account technically feasible, but assistance with institutional
development will be required to support its operationalization and the development of
associated processes and procedures.
The PAD for the project clearly identified the need for:
(i) A Government TABMIS implementation team: Although much of the
responsibility for delivery of the new TABMIS would be given to the tum-key
contractor, it would still be essential to have a Government counterpart team in place
at central, provincial and district levels to interact with the tum-key contractor's
consultants. These costs will be financed 100 per cent by Government contribution.
(ii) The need for recurrent operating costs: There are major recurrent operating costs
associated with this component. These include the costs of hardware maintenance,
software maintenance and connectivity (bandwidth purchase). These recurrent costs
will build up during the implementation period, as the system is rolled out and
additional software licenses are purchased.
During the implementation period, these costs would be financed through a blend of IDA
credit and Government contribution. In steady state, they were estimated to be some US$3.2
million per year, and the Government would meet these costs in full from the date of project
closing. In addition, hardware replenishment costs will occur from time to time. These are
estimated to be in the order of US$2.6 million approximately every five years and the
Government will ensure that these funds too are made available if the system is to remain
fully operational.
APPENDIX C 76
After the project became effective, the TORs of BAH were enhanced (Feb 2005) to include
activities envisaged under the categories:
Procurement assistance and Independent Bid Evaluation
Independent Validation and Verification (IV&V)
Training and change management.
IBM Singapore was awarded in 2005 the contract for the implementation of TABMIS (after a
Bank NOL issued on in June 23 2005) covering all implementation activities envisaged in
after a two stage ICB based on tender documents and technical specifications prepared by
BAH. IBM proposed Oracle EBS as the application software to be used as a basis for
TABMIS implementation.
Comments on the Preparatory and Design
Policy and Technical Infrastructure Prerequisites. The preparatory and diagnostic work
under taken by the Government and the Bank team had clearly identified the reasons for the
fragmentation of the information systems which resulted in the lack of timely availability and
integrity in overall fiscal data, transparency and control in financial operations.
The Government had accordingly initiated activities that enabled improvements in the
underlying policy and institutional environment that are essential pre-requisites for any FMIS
implementation. These were:
(a) Amendments to the legal framework to clarify institutional roles responsibilities for
financial management;
(b) Recognized the requirement for a uniform budget classification structure and Chart of
accounts across all levels of Government that is in conformity of international
standards such as the IMF’s GFS and started activities to put this in place;
(c) Recognized the requirement of consolidation of Government bank accounts into a
Treasury Single Account (TSA) at the Central Bank and started parallel initiatives to
set this up.
In addition the Government also undertook parallel investments to improve the technological
infrastructure, including the required telecommunications network.
System Design and Sequencing. Consultants (BAH) hired by the project developed focused
functional specifications for TABMIS based on the World Bank-IMF Treasury Reference
Model. 1 The design parameters for the systems ensured that:
The scope of the implementation would be restricted to the modules to cater to Core
Budget Execution Processes, and processing of payments and receipts transactions,
across government, before covering other non-core elements (fixed assests, HR
management, etc.). Fixed assets were initially included, but subsequently dropped and
not implemented.
1 World Bank Technical Paper 505, 2001; Ali Hashim and Bill Allan.
77 APPENDIX C
A Treasury Centric System would first be implemented and then decentralized to
spending units as necessary - An attempt should be made to first capture payment /
receipt transactions at Treasury offices then de-centralize to Spending units – if
necessary/possible.
To start with, budget preparation will be done outside the system or by another
system, and the final approved budget will and then be loaded in the system and used
to control expenditure - However, all subsequent in year budget transactions, like
budget releases, “virements,” transfers etc. would be done in the FMIS system.
Budget Department, Treasury, and Line Ministries would use the same system to
process their transactions and would share databases; Budget Preparation and Budget
Execution should use the same Chart of Accounts. The Economic classification
segment should be a subset of the accounts line item segment.
Transactions should be captured in real time as they occur; Financial controls should
be applied in ex-ante mode to all transactions processed by the system (e.g. funds
availability checking on budgeted expenditures prior to committing funds or making
payment); Ex-post transaction posting would be avoided; No expenditure transaction
should be processed outside the system. Data should be captured only once as an
accounting transaction progresses through the system. The scope of the system should
include: Budget Funds - Payroll, Debt, Subsidies, Fiscal transfers, EBFs, Donor
Funds and internally generated revenues.
The TABMIS databases should be treated as the primary source for financial
reporting within Government; there should be no second set of books.
Accordingly it was agreed that the initial functionality for the Vietnam FMIS would include
the following elements:
(a) Budget Management-Budget Apportionment, Budget Allotment, Budget Releases,
Budget Transfers.
(b) Commitment Management – Recording all commitments relating to intended
government expenditures.
(c) Payment Management- Processing all government expenditures relating to:
(Procurement of goods and services from current/capital budgets, Salary Payments,
Debt servicing payments, Subsidies/Fiscal transfers to sub-national levels or SOEs.
(d) Receipts Management - Recording revenues and other receipts- Accounting (posting
all transactions as they occur).
(e) Cash Management.
(f) Fiscal Reporting.
In order to fulfill this functionality the system would need to:
(a) Record- Initial budgets, budget revisions, budget releases; commitments; purchase
orders, receipt of goods and services; vendor Invoices.
(b) Authorize payments after checking for controls and give payment instructions to
Bank- initially using checks printed from the system and then trough EFT
arrangements.
APPENDIX C 78
(c) Record revenues and other receipts paid into Government accounts, Reconcile with
bank records.
(d) Enable monitoring of balances in Government accounts.
(e) Enable posting of all transactions, enforcement of controls, accounting and
comprehensive reporting.
(f) Ensure that these functions are performed by authorized staff only.
(g)
These design parameters conform to the Bank’s experience in implementing such projects in
several other countries which also showed that implementation needs to be sequenced as
above.
Systems procurement was carried out through a competitive two stage ICB process based on
well prepared detailed technical specifications which described the scope of the system in
terms of the functional processes that would be covered and the agencies where the systems
would be installed.
Implementation envisaged a configuration/ parametrization phase in which the application
software would be configured to Vietnam specific requirements and tested. It would then be
piloted in selected sites and finally rolled to all sites. A treasury centric model was adopted
but provision was made to also link selected spending units (SUs) towards the end of the
project.
System Procurement. The two main contracting assignments that were involved in project
implementation were: a diagnostic and design consultancy and a contract for actual system
implementation.
Diagnostic and Design Consultancy. The design of the main consultancy package proved to
be a significant bottleneck for systems implementation in Vietnam.
The major consultancy required for the design, procurement and implementation phases is
for diagnostic, design and project implementation and contract management. The work is to:
(a) review the existing business processes, recommend changes and develop functional
requirements and systems specifications for the system to be procured; (b) during the
procurement phase, assist the government in the execution of the complex World Bank
procurement processes; (c) in the implementation phase, help the government manage and
supervise the work of the contractor hired t, and ensure that the system that is implemented
according to specifications; and (d) help the government in contract management. Other
subsidiary consultancies, for example, for change management and training, may be
contracted separately.
In Vietnam, the main consultancy was split into various contracts with the same consultant
(BAH). However the consultancy for the supervision/implementation phase was called an
Independent Validation and Verification (IV&V) consultancy.2The consultants misread the
2 Normally the IV&V process is carried out by the government with the help of Bank support where
the consultant’s design is evaluated by the government and Bank team to ensure that it makes sense in
the country specific circumstance. A consultant could also be hired for this process.
79 APPENDIX C
purpose of the hiring and saw it as an audit type of exercise where they were to critique the
initial design and the implementation work, instead of actually helping the government to
ensure that the contractor implements the system in accordance with the design which had
been specified and approved earlier.
This caused major difficulties, and this consultancy did not achieve the purpose for which it
was intended and the Government finally terminated the contract. As a result the government
was left with limited support in the contract management and for supervising
implementation. This resulted in a situation that the Government had to rely exclusively on
the implementing contractor (IBM) advice during this phase.
Configuring this consultancy assignment as a single package extending from the design to
the implementation phases as was done in e.g. Pakistan, Kazakhstan, Russia may have
mitigated these problems and ensured that the Government had consulting help and
independent expert technical advice available throughout.
System Implementation and Utilization
Project Management Arrangements. Strong Government commitment, support from the
MOF, High level project sponsorship, end user involvement and interagency coordination are
critical for successful implementation. A set of project management structures are required to
achieve this including:
A senior level project sponsor from the MOF to ensure that government commitment
and support that will be required for introduction of policy changes and the decision
making required is present.
A Steering committee with representatives of all major stake holders- MOF,
Treasury, Budget, Central Bank, Line Ministries, Revenue collection agencies to
provide policy guidance and ensuring consensus across all stakeholders.
A PMU to handle day to administrative aspects; Procurement of consultants and of
the hardware and software necessary to implement the system.
A project manager who is a senior official from the functional side with stature within
bureaucracy and adequate financial and administrative powers to cater to day to day
operational administrative and financial requirements.
It needs to be noted that FMIS projects should not be seen as information technology
projects. The primary emphasis of the project needs to be on the functional objectives such as
fiscal control, cash management etc. and this requires that management of the project is
competent in these areas rather than technology.
Project Management arrangements set up in Vietnam fulfilled these requirements. The Vice -
Minister of Finance played the role of the project sponsor and showed continued
commitment to the setting up of a FMIS. This was able to sustain Government interest in the
project over its long execution period. The Vice Minister headed the steering committee
which consisted of General Director level officials from the various MOF with
representatives from other line ministries. The Steering committee met twice a year and
APPENDIX C 80
provided policy guidance. A PMU oversaw activities in all project components and handled
day to administrative aspects. A TABMIS implementation unit was set up in the Treasury to
oversee TABMIS related activities. The TABMIS project manager was a senior official from
the functional side.
TABMIS Implementation and Status. The Vietnam TABMIS came into operation in
phases over the period 2010-2011. It is now operating in stable mode. It is a mission critical
system and is the backbone of the Government of Vietnams financial operations. The system
serves as a common platform to all treasury offices and financial agencies at all four levels of
the Government for budget allocation and control, payment and receipt processing,
expenditure and revenue accounting and reporting.
TABMIS is fully operational in all 1,500 treasuries and financial agencies across all 63
provinces, and 37 spending ministerial organizations, and 3 major departments of Hanoi city
since October 2012.
The Vietnam TABMIS has been implemented in a centralized architecture with the main
servers located at the Treasury headquarters in Hanoi. All treasuries connect to the central
servers over a telecommunications network to process their transactions. In addition Budget
managers (vote controllers) at the Center i.e.; the MOF and the Line ministries HQ, and the
Directors of Finance and Planning at the Provinces at the Districts are also connected to the
system. These officials perform the budget allocation function and allocate the budget to the
SUs under their jurisdiction and make any in-year changes and can monitor the budget
execution process for the SUs under their jurisdiction, e.g. query the budget balances, etc.
This has enabled the government to allocate, execute and monitor the state budget through a
centralized financial management information system, on a transparent and real-time basis.
Improved accuracy and consistency in budget control, payment processing, accounting and
reporting is achieved through application of a unified TABMIS Chart of Accounts (COA)
and a single database of TABMIS, replacing multiple COAs and multiple treasury legacy
systems located throughout the country. Furthermore, data on government receipts and
expenditures, cash and fund balances available in TABMIS in real-time and treasury and
finance offices are able to produce instant reports for management purposes. Payment
processing through TABMIS has helped enforced compliance and enhanced transparency in
budget execution throughout all levels of government.
The system operates in Treasury Centric mode which means that SUs at the Center and the
provinces need to submit their transactions such as payment requests to the appropriate
treasury office. Treasuries at these locations subsequently enter the transactions in the
system. To illustrate this process: SUs in Hanoi submit these transactions to the Hanoi
Treasury; sectoral departments in the provinces and the districts submit them to the relevant
provincial and the district treasuries respectively; and the communes (about 10,000) submit
their transactions to the district treasuries.
A Government wide training program was carried out to train end users in the use of the
system/ Around 15,000 end user staff were trained to use the system to perform their day to
day work
81 APPENDIX C
The TABMIS is a large country wide system. At present about 11,000 users connect to the
system country wide3. Of these about 7,500 are Treasury officials and 3,500 are officials of
the Finance and Planning Departments at the center, the provinces and the districts. The
current transaction volumes range from about 2.2 million transactions per month in Jun2
2015 to around 3.8 million transaction per month in November/ December 2015, the close of
the fiscal year. Thus approximately 30 to 40 million transactions are processed by the system
in a year.
The TABMIS systems deployment architecture is shown in figure. 1. The way TABMIS fits
in to the Vietnam’s Public Financial Management Architecture is shown in in figure 2 which
depicts TABMIS along with the other systems used in Vietnam to support PFM (not all of
which are automated at this time).
3 Compared to about 1,000 users in Malawi, 3,000 in Ghana and 6,000-7,000 in Pakistan.
APPENDIX C 82
The Use of a Web-Portal for Systems Access. A spending unit based system deployment is
in principle preferable since it is desirable to pick up the transaction at its origination point.
However there can be significant cost implications involved in such a deployment. The
number of spending units in a country can be quite large, compared to typical Sub Treasury
office numbers (In Vietnam the SUs are estimated to be around 300,000, while the Treasury
and Finance offices are around 1,500).
Connecting such a large number of end users directly to the system requires that end users
have an end user license for the application software (typically US$500 to US$1,000 per user
annually). The processing requirements on the central servers would also rise
correspondingly. These incremental costs could become very high if all 300,000 end users
are to be connected directly to the system.
83 APPENDIX C
An additional issue is that the Treasury Law in many countries including Vietnam requires
that the Treasury be responsible for payment control. Direct access to the system, even if it
were to be provided, would therefore need to be restricted to recording the transaction but not
clearing it for payment.
With the advent of web based technologies, alternative means are now available to give
spending units access to the system. Costs may thus be contained while the role of the
treasury to exercise control on payments is retained. SUs can now have access to a web-
based portal that would enable them to send a transaction to the system. SUs can create
transactions in the public services provided by the web Portal to send the transaction
information to the State Treasury and then interfaces it to TABMIS on the basis of SUs using
digital signatures for authentication and security purposes.
The public services in the web Portal do not yet allow look-up budget execution figures and
reports. Line ministries access the reports directly in TABMIS. Figure 3 above shows the
working of web-portal based access to the system.
APPENDIX C 84
The Vietnam Treasury has now started a pilot to provide such access to SUs and other end
users. It will enable them to send transactions to the system electronically via a web portal
instead of being required to bring them physically to the Treasury offices. A pilot has been
completed in 5 provinces with selected SUs in each province being given access. At present
the access is limited to sending transactions such a payment requests, but there are plans to
expand the functionality to include querying the system data bases and producing reports
such as budget execution reports.
An Assessment of the Capacity and Effectiveness of the TABMIS as a Budget
Management Tool
Methodology. The following features determine the effectiveness of a FMIS as a budget
management tool:
(a) Enabling environment: This includes the status of the TSA and an evaluation of the
degree of consolidation of Government Cash Balances in a TSA (Government funds,
Internally generated funds (IGF's), Donor funds).
(b) FMIS Coverage: This includes an evaluation of the coverage of government financial
transactions by the FMIS- comprehensiveness of transaction processing;
(c) Core System Functionality: This includes functionality related to: Budget
Management; Commitment Management; Payments Management and associated
controls; Payroll related payments; Debt Service Payments; Fiscal transfers/
Subsidies; Evaluation of the comprehensiveness and timeliness of tax and non-tax
receipts posted in FMIS; The nature of the Banking Interface; Quality of Fiscal
reporting; Basis of Accounting; Use of Advanced Budgeting features-Line Item-
Program based etc.
(d) Non-Core functionality: This includes use of Other Systems Modules and interfaces
with other systems, e.g. Budget Preparation; MTEF capability; Establishment control
and its integration with Payroll payments; Debt Management; Fixed Assets; Auditing.
(e) Some technical aspects: Nature of Information systems support for Budget Execution
/ Treasury Processes; Systems Architecture; Use of a Data Warehouse/and analytical
tools.
Some informational items: Name of Application software package (COTS) used with
version; Capital Cost to date; Annual Recurrent cost (operating expenses) including License
fees (Application Software, middleware); Telecommunications; Technical staff for systems
operation and maintenance; Number of end-users connected to the system - Average,
maximum.
Coverage of TSA. Percentage of the Governments financial resources banked in the Central
Bank and scope and comprehensiveness of the Treasury single Account (TSA):
(a) The Mission was informed that a TSA4 had been set up at the Central Bank of
Vietnam with the major part of Governmental financial resources being banked in it.
A move to the TSA started in the third Quarter of 2013. TSA arrangements had been
4 The TSA related activities were not directly financed by the project but the TSA is a critical feature in terms
of the capacity of a FMIS as a budget management tool.
85 APPENDIX C
rolled out to all State Owned Commercial Banks (SOCB) by Mid-2014. Out of these
four SOCBs provide the direct revenue collection and payment services through four
accounts that have replaced the approximately 700 previously existing bank accounts.
This has resulted in rationalization of banking arrangement for government cash
management.
(b) The revenue agencies deposit tax and customs receipts in deposit accounts in
designated commercial banks which are cleared to the TSA. Non-tax receipts are also
deposited in the TSA.
(c) Line Ministries do not receive large advances at the start of the year which would be
banked outside the TSA.
(d) The two large extra budgetary funds (EBFs) are the Social security and the Health
insurance fund and the Employment Insurance fund. They constitute about 95% of
the total not covered by the TSA. This is normal practice in many countries which do
not allow co-mingling of these funds with other government financial resources. Out
of the remainder, some EBFs are part of the TSA and some are not – e.g. the disaster
relief fund, is not. The total value of the resources outside the TSA is estimated to be
small.
(e) IGFs - revenues (fees etc.) are deposited in the Central Bank/TSA. The new 2015
budget law encourages devolution of financial and other powers to lower levels. IGFs
will be managed by SUs in the future (starting 2017) and managed separately from
the TSA. This aspect needs to be monitored as it evolves. It may become necessary to
require SUs to open Bank accounts in designated commercial banks. These accounts
would operate on a zero balance basis (ZBA) and be cleared to the TSA overnight.
The SUs would still be able to execute transactions against these accounts without
going through the Treasury and retain autonomy of expenditure.
(f) Donor funds are not banked in the Central Bank /TSA. They are banked in
accordance with agreements with the respective donors. However total resources only
constitute 8% of the total government financial resources (compared to 25-45% in
some African countries) so this is not a pressing issue. However, it may be useful to
ascertain whether these resources are used by the commercial banks to buy any short
or long term instruments floated by the government, and if so to consider other
options.
On the basis of the above it is estimated that around 85-90% of the total government
resources are banked in the TSA or TSA linked arrangements. This level of coverage is
considered high.
Coverage of TABMIS. The mission collected information needed to establish the
comprehensiveness of the coverage of the TABMIS for government financial transactions
and to determine which payments payment and receipt transactions are routed through the
TABMIS:
(a) The TABMIS has been implemented at the Central, the Provincial and the District
levels. All SUs at each level are required to send their transactions (such as payment
requests) to the respective treasury offices. Budget controllers at each level have
APPENDIX C 86
access to the system to allocate budgets to SUs under their jurisdiction and perform
the budget monitoring function. It is therefore a country wide system5. Transactions
against those EBFs which are part of the TSA are processed through the FMIS.
(b) Transactions against IGFs are currently processed through the FMIS; (as noted above
this may change in 2017).
(c) Transactions against Donor funds are NOT processed through the FMIS. Grant
transactions are processed through TABMIS.
It is estimated that around 85-90% of the total government resources are processed through
the TABMIS.
Core Functionality and Controls. The mission tried to establish the quality of the core
functionality provided by the system and the controls it incorporates:
(a) Basis of accounting: TABMIS currently operates on a Modified Cash basis; however
it has the capacity transition to full accrual accounting as required.6
(b) Budget Management: A comprehensive budget classification structure with capacity
to also monitor expenditures on projects is in use. Budget execution is on a line item
basis. Transactions related to both the capital and the recurrent budgets are processed
through TABMIS.
(c) A unified COA for TABMIS: This has been developed and applicable throughout all
four levels of the government for treasury and budget management. This multi-
dimensional COA with 11 segments captures all relevant information required for
budget management such as source of fund, location, administrative, economic and
functional budget classifications, targeted programs, projects, spending units etc.
provides flexibility to analyze, consolidate and report for each segment and for a
combination of segments. Relevant segments of the COA are consistent with the
international functional and economic classifications of expenditures as provided in
GFSM2001/COFOG allow for GFS reporting.
(d) COA: COA used for budgeting is the same as that for accounting: This enables
integration of budget and accounting data. The same COA is used across the various
levels of Government. This enables consolidation across different levels of
Government.
5 This contrasts with the case in many countries where the system operates only at the Central or the
Central and provincial levels. Also the Treasury law in Vietnam makes it responsible for all budget
transactions at each level of government. In other countries, e.g. Russia, the Central Treasury is
responsible for execution of the Governments Central Budget only. (Spending units all across the
country funded by this budget are required to use the Central Treasury system) Oblasts and Rayons or
cities operate independent Treasuries may have their own systems.
6 TABMIS is supporting a move toward accrual accounting as large state budget expenditure
commitments are being controlled and monitored through it. In addition, some accrual accounting
information such debt obligations are accounted and recorded in TABMIS immediately as they are
incurred.
87 APPENDIX C
(e) Budget controllers at each level have direct access to the system: At the start of the
year the budget controllers at the MOF load the initial budget at a high aggregate
level in the system. The Line ministry budget controllers allocate the budgets to SUs
under their jurisdiction, those at the provincial and the district levels do so for the SUs
in the provinces, the districts and the communes. All in year budget transactions are
also entered directly by the budget controllers at each level.
Commitment Control: Treasury has implemented commitment thresholds for the Recurrent
and the Capital budgets. These are set at US$5,000 and US$25,000 respectively. SUs are
required to send commitment transactions for expenditures equal to or exceeding these values
to the Treasury within three days of the commitment, e.g. issue of a Purchase Order for
goods or services. The Treasury enters this as a commitment in the system. When an invoice
is received from the SU and entered in the system by the Treasury, TABMIS checks for prior
commitment in addition to budget availability before releasing it for payment. In this way
Treasury manages to exercise commitment control over 85% of the budget or so without
requiring the SU to raise commitment transactions for every little payment transition which
would be counterproductive and clutter up the system with very high transition volumes
without a corresponding benefit.
(f) It may be noted that TABMIS has not been implemented in a full P2P mode as in
Malawi or Ghana: It is a Treasury centric system and doing so would require the SUs
to send very stage of the transaction e.g. request for services, POs GRNs Invoices etc.
to the Treasury and also require the Treasury to generate the PO through the system
which would not be possible in view of the very large volumes of transactions
involved. The mode of implementation adopted in Vietnam is the same as that
adopted in other countries which operate a Treasury centric system, such as Russia,
Pakistan, etc.
(g) Payment management: TABMIS handles all types of payments. These include goods
and services payments, salaries, debt servicing; fiscal subsidies/ transfers. The system
checks for budget availability and commitment (for transactions above the
commitment threshold) prior to releasing for payment and therefore exercises Ex-ante
control:
For payroll payments a payment request is sent from individual SUs based on
a calculated payroll. The Treasury enters it as a payment request in the
system. These transactions are subject to ex-ante budget control.
Debt service payments are sent to the Treasury by the Debt Management
office; these are routed through TABMIS and subject to ex-ante budget
control.
Fiscal Transfers subsidies are routed through TABMIS and subject to ex-ante
budget control.
(h) Tax and nontax receipts: Tax and customs receipts are deposited in Treasury Single
Accounts (TSAs) of the State Treasury. Budget revenue information is exchanged
among the State Treasury, Tax and Customs Departments and commercial banks
through centralized Tax Collection systems/applications (TCSs), the Tax Collection
e-Portal, Customs e-Portal. The State Treasury receives and controls budget revenue
information and runs the automated interface between TCS and TABMIS GL. Non-
APPENDIX C 88
tax revenues are recorded in the TABMIS GL on the basis of information received
from TCS, Finance Departments or Spending units
(i) TABMIS is connected with banking systems via the VST payment applications for
both bilateral settlement and inter-bank clearance IBPS and then via enterprise
service bus connects to banks under the two mechanisms of webservices and MQ.
(j) TABMIS has a capacity to provide comprehensive fiscal and financial reporting. It
has complete and timely information on all budget receipts and expenditures and the
capacity to produce a comprehensive set of fiscal/BERs reports required by the MOF.
However, at present the MOF does not use this facility directly and requests Treasury
to run the required reports for them as necessary. A capacity exists to down load data
from the system to EXCEL and to publish reports using XML publisher.
On the basis of the above assessment TABMIS has the core functionality required for
effective budget execution and incorporates key controls which are applied in ex- ante mode.
Considering its coverage as described above, transactions related to 85-90% of the
government financial resources are subjected to controls prior to payment.
Ancillary Functional Features. The following assesses some ancillary features related to
system functionality, such as use of other systems modules and their interfaces with other
systems.
(a) Nature of the Budget preparation system: The MOF operates a separate Excel based
Budget preparation system. Budget figures from this system are loaded by the MOF
and Budget controllers into TABMIS at the start of the year.
(b) The MOF is piloting an MTEF in selected pilot ministries: MTEF is not integrated
with TABMIS.
(c) Human Resource management System (HRMIS) and establishment control: There is
no Central HRMIS or establishment control system in place. SUs have position lists
available to them and check before forwarding the payroll request to TABMIS for
payment.
(d) Debt Management- Government uses the Debt Management and Financial Analytical
System (DMFAS) for external and Domestic Debt: DMFAS is now accessible by 90
users in all five relevant departments in the MOF. An interface between DMFAS and
TABMIS has been developed and is operational. Through this automated interface,
receipt from debt issues or borrowings for on-lending purposes or for projects is
posted directly into the TABMIS General ledger (GL). Payment for interest or
repayment of principal for both domestic and external debts is interfaced into
TABMIS Accounts Payable (AP).
(e) Fixed Assets management is carried out separately from TABMIS.
(f) The External auditor does not have direct access to the system data bases and requests
Treasury for reports/data as may be required.
Some Technical Features and Costs. TABMIS is based on a commercial off- the-shelf
application Software Oracle EBS v 11.5. It is a full function system; currently the modules
that have been implemented are modules for (i) Budget Allocation, (ii) Accounts, Payable,
(iii) Accounts Receivable, (iv) General Ledger, (v) Purchase order, and (vi) Cash
Management. The system has been implemented in a centralized architecture and in a
89 APPENDIX C
Treasury centric mode. However, web portal access is being piloted for the System from
selected provinces and SUs. A data warehouse is also available but not used extensively at
present. The Government is considering migration to version 12 of the ORACLE in the
coming years but no firm plans have been made as yet.
Number of Users7: Treasury has 10,730 named user licenses. At present the maximum
number of concurrent users is around 7,700 and on average this number is 4,000.
TABMIS Costs: The initial contract with IBM Singapore for the TABMIS was for
US$49.02 million. The BAH contract had a ceiling of $2.69. In addition variation orders
were signed for the supply of additional Oracle licenses and additional server capacity.
According to the VST8 the cost breakdown is as under: (i) Oracle licenses US$14.51 million;
Implementation services US$40.69 million; HW and System Software US$11.62 million;
Design and IV&V consultancies US$2.09 million; for a total of US$68.91 million. The cost
of the Telecom network which is shared with other Government applications was borne by
the MOF and is not included. Training costs are also not included. Therefore according to
these figures the total cost of TABMIS is around US$70-75 million9. This is in line with
Implementation per user costs for other large budget execution systems projects e.g.
Indonesia, Pakistan. The time taken for implementation, 10 years is also comparable.
Ongoing Operations and Maintenance. In addition to the investment costs that are incurred
in first setting up the IFMIS a provision also needs to be made to cover costs that will be
required to be incurred on an on-going basis each year to keep the system operational. The
main recurring cost elements that need to be funded are:
(a) Hardware Maintenance / Replacement: Maintenance can be estimated to cost between
10–15 percent of the installed hardware costs per annum. Hardware life cycles vary
between 3–5 years.
(b) Application Software and DBMS/ Tools License Fees: This is a very significant
element and may reach between 20–22 percent of the initial license fees per annum
(c) Telecommunications Costs: These are associated with use of the wide area network
(WAN) for communicating between the remote and central sites.
(d) Stationary, Utilities including POL for generators etc. Office Premises.
(e) Staff Costs.
(f) On Going Training costs: These continue throughout the life of the system as trained
end- users rotate out of their positions in most governments after a few years and
these positions are filled up with new, untrained staff. Technical skills may also
require upgrading as new versions of the application software and hardware are
implemented.
7 Response to a diagnostic survey for PEMNA countries distributed at a PEMNA conference in
December 2014.
8 As above.
9 According to the PFMRP ICR the increase in the cost of TABMIS due to increase in its capacity to
accommodate the substantially higher number of users and transactions resulting from huge jump in public
expenditure. Between design and TABMIS full roll out, the number of system users has increased nearly three
times and the total budget expenditure processed by the system has gone up by five times.
APPENDIX C 90
Vietnam Treasury has allocated some US$3.2 million dollars per year for maintenance.
However this is not the complete figure as other departments (e.g. the MOFs central IT
Department) are responsible for Hardware and Application Software maintenance costs and
for Telecom costs over the country wide network. The mission was informed that an amount
of US$5 million per year has been allocated for Telecom costs across the network and
another US$5 million has been used for contracting for two years recurrent Oracle license
fees maintenance costs. Additional amounts are budgeted for hardware maintenance and
support. The major categories of spending that needed to ensure continued satisfactory
operations and maintenance of the TABMIS have been budgeted for.
Technical Staffing. Once operational a TABMIS type system becomes a mission critical
system. Availability of technical expertise is critical for the uninterrupted operation and
maintenance of the system and can be a source of significant vulnerability for the continued
operational stability of the system. Usually, a central organization is responsible for
maintenance of the integrity of the databases and for ensuring smooth and uninterrupted
operation of the systems network. End-user technical support is also provided through this
organization.
In Vietnam Treasury Staff have successfully taken over operation and maintenance activities
from the contractor after project completion and are satisfactorily performing this function
for the last two years of so. The IT Department is responsible for hardware and WAN
support and maintenance. Treasury has 70 certified Oracle specialists on its staff and other
specialties required for systems operation and maintenance. Some of these staff are posted in
the provinces. They also have access to external consultant assistance as ay be required to
supplement in-house facilities.
Conclusions. On the basis of the above assessment the mission is of the view that TABMIS
is an effective tool for effective budget management for the Government of Vietnam. Its
scope covers 85-90 % of the financial resources available to the government. Its geographic
coverage extends across the country and across all four levels of Government. The system
functionality implemented includes effective ex-ante budget control for government financial
resources (and commitment control above specified thresholds). Systems functionality covers
core budget execution processes. Some 10,000 Treasury and Finance officials use it for the
Governments day to day financial operations.
The technology employed is state of the art and adequate numbers of staff are available for
its continued operation and maintenance. The Government has made provisions to cover
recurring costs related to system operations and maintenance and the system is currently
operating in stable mode.
Continuing Risks and Vulnerabilities
Whist TABMIS is the system of record for Vietnam’s Financial Management Information its
use is still restricted to the Treasury staff and the Budget Controllers at the financial agencies.
It provides a stable environment for processing and recording transactions related to
Government financial operations. However, end users in line ministries and elsewhere do not
at present have access to the system and its databases. Therefore they need to maintain
91 APPENDIX C
parallel systems in their own agencies to be able to respond to queries regarding the status of
their budgets from their management.
The Mission visited two line ministries: the Ministry of Agriculture and the Ministry of
Health. Both these ministries are maintaining parallel systems. In addition to the fact that the
budget related information required by the line ministries is available in the central system,
the additional problem with the approach of maintaining parallel systems is that it requires
double entry of transaction data and the expenditure data in the satellite systems, which is not
reliable since it is not based on actual payments.
The budget department at the MOF also stated that to get information on the status of the
budget for one or more line ministries they need to call the Treasury who will run the
required reports for them. While it is understood that it would not be cost effective to give
direct connections to all end users, web-portal based connections which are being piloted in
selected provinces and SUs to enable SUs to send payment requests could be enhanced to
enable access to budget execution and other reports required by end users.
The Treasury assured the mission that this was planned. Also at present a set of 16 reports
which included the most commonly required types of information are already accessible to
budget controllers in line ministries who already have access to the system.
In addition to provision of access to the SU level there is also a training issue. Treasury needs
to ensure that staff in Line ministries and financial agencies who are already connected get
the required training to enable them to access the system and print reports.
It is important that the above issues be tackled promptly so that end users can make full use
of the detailed information available in the TABMIS system databases and fuller use is made
of this expensive system.
While Centralized payment systems are an efficient means to ensure budgetary control and
good cash management, they are resisted by line ministries which perceive that the Central
Treasury delay payment requests. It is therefore necessary that Treasury implement a system
to monitor the time taken for it to approve and make payments for various types of
transactions. They need to develop standards on the percentage of payment requests that are
approved and paid within a specified time period and maintain data on the time taken to pay
all requests so that they can monitor those requests which are taking excessive time.
During initial systems implementation in 2011 it was observed that the system response time
slowed as the volume of transactions became large (e.g. towards the close of the year). It was
found that while performing the budget check at a given provincial Treasury in a given
province the system was locking out all other users even in other provinces. IBM and Oracle
had to put in a patch to the application software to fix this problem. The Treasury informed
the IEG mission that the problem has now been fixed. System response times need to be
monitored to ensure that this problem does not surface again. Also as the Treasury moves to
the newer version of the software (version 12) this patch will need to be ported to the new
version.
APPENDIX C 92
The COA used in Vietnam has eleven segments. This is good in so far as it allows transaction
data to be analyzed in multiple ways. However, too elaborate a COA can be cumbersome at
transaction entry and can also degrade system performance due to the additional load on the
servers. The Treasury may examine simplification and rationalization of the CoA in the light
of actual reporting requirements.
Profile of Expenditure Transactions
The mission asked the Treasury staff to run a profile of expenditure transactions. This is
tabulated below for one full year of transactions (about 30 million) for the year 2015. It
indicates that only 7.8% of the transactions (above VnD 200 million) account for 88% of the
budget processed through TABMIS.
# Range Amount of Transaction in VnD
% of
Transactions
% of total amount in
VnD
1. <200,000,000 92.33 11.90
2. >=200,000,000 and < 1,000,000,000 5.86 12.77
3. >=1,000,000,000 and < 2,000,000,000 0.87 6.36
4. >=2,000,000,000 and < 10,000,000,000 0.81 16.93
5. >=10,000,000,000 and < 20,000.000.000 0.07 4.96
6. >=20,000,000,000 0.06 47.08
Total 100 100
The mission asked the Treasury to also try to determine which of the 300,000 SUs units that
they serve are responsible for generating much of these transactions. (This number would be
very small compared to the total and could of the order of 5000 SUs). These are the big
spenders in the system akin to large tax payers on the revenue side. Identifying these SUs
would enable the Treasury to focus control on their transactions above this threshold instead
of wasting efforts across the whole network. Also this would make it easier to determining
future cash requirements and developing borrowing strategies.
93
Appendix D. Updated Results Matrix of MDTF II
Project Development Objective Intermediate Outcomes
Strengthened capacity for: increased coordination
and transparency in public financial management;
improved revenue mobilization; and effective and
efficient public expenditure management
Increased coordination and transparency across the
national PFM system through a clear reform strategy,
greater disclosure, improved oversight capacity, more
secure IT systems, and compliance with PFM
legislation.
Improved revenue mobilization through equitable and
efficient tax policies; and efficient customs
administration.
Strengthened expenditure management through higher
accounting standards, and improved capacity in
financial reporting, cash management, and state asset
management
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
1) Increased
coordination and
transparency across
the national PFM
system through a
clear reform
strategy, greater
disclosure,
improved oversight
capacity, more
secure IT systems,
and compliance
with PFM
legislation
1.1) Completed
Public Expenditure
and Financial
Accountability
(PEFA) Review.
- MOF has completed the
PEFA report. Having
approved by the MOF and
Government, the report has
been disclosed/
disseminated through a
workshop held in Nha
Trang (4-5/7/2013);
- Currently, benchmarks
under the PEFA report are
informing the formulation
of PFM reforms and
serving as baseline data for
monitoring and evaluation
system under Financial
Sector Strategy’s Medium
Term Action Plan 2014-
2016 (MTAP)
- PEFA report was used
extensively to inform
new Government
policy including the
recent issuance of the
revised State Budget
Law in 2015, which
among other things, (i)
builds a robust fiscal
policy framework with
the medium-term
fiscal framework that
aligns revenue and
expenditure with the
development
objective; (ii)
increases fiscal
transparency by
disclosing the
executive budget
proposal to the public
when it is submitted to
the National
Assembly; and (iii)
aligns recurrent budget
classification with
capital budget
classification.
- PEFA report served as
the baseline result
framework to monitor
the PFM Analytical
and Advisory
Assistance (AAA) TA
provided to the
APPENDIX D 94
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
Government during
2015-2020.
1.2) Action Plan for
implementation of
FDS (2011-2020)
approved by the
Ministry of Finance
(MOF) and the
Monitoring and
Evaluation
framework of FDS
fully developed.
- With the support of
MDTF2, MOF has
completed developing its
Action Plan for
implementation of
FDS2011-20; accordingly,
this has been approved by
the Minister of MOF on
30/1/2013 through his
Decision 224/QĐ-BTC
regarding granting
approval to the FDS2011-
20’ Action Plan to
implement the set
objectives and solutions/
measures under the
FDS2011-20.
- The draft MTAP2014-16
and the M&E framework
has been sent to relevant
agencies,
departments/units inside
the financial sector, as well
as to the developing
partners, for their
comments. It is expected
that the MTAP will be
improved/finalized within
12/2013 with aim to
concretize and implement
the objectives of the
MTAP2014-16 in a
prioritized and sequenced
manner and with specific
project for each
departments/units of MOF
headquarter and in the
financial sector as a whole.
- The medium-term
action plan 2015-2017
was issued by the
MOF Decision
704/QD-BTC dated 17
April 2015, which
comprised 8 pillars
and 45 activities to be
implemented during
2015-2017. 36 of 42
activities were
completed in 2015.
One activity was
adjusted and one more
activity was added to
the action plan. Some
results are highlighted
below.
- Pillar on revenue
mobilization: the
Government has
already made progress
on several tax policy
and tax administration
including increasing
tax revenue from
domestic market and
collection of tax
arrears.
- Pillar on the tax and
custom administrative
procedure reform has
been progressing very
well. The Government
recently issued
resolution 19 to
substantially shorten
the tax compliance
time.
- Pillar on public debt
management was
being consciously
managed by MOF.
Although public debt
has been under the
debt threshold, debt
servicing and interest
payment are rising,
leading to the need to
95 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
restructure the debt
portfolio.
1.3) Developed
regulations on
disclosure of
information on public
and publicly
guaranteed debt.
- MDTF2 Project has
provided support for the
development of Circular
56/2011/TT-BTC dated
29/4/2011 providing
guidelines on method to
calculate the supervision
criteria and organize for
supervision of public debt
and national foreign debt.
- Public Debt Bulletin is
published on bi-annualy
basis to provide additional
information on domestic
debt. The DMFAS system,
which initially included
only public debt and
government guaranteed
debt, has been extended to
incorporate also
information on domestic
debt.
- MDTF2 provided support
to organize a workshop to
provide input information
to develop the PM
Decision 958/QD-TTg
dated 27/7/2012 regarding
granting approval to the
Public Debt and National
Foreign Debt Strategy
2011-2020, with Vision to
2030, with aims to
strengthen the institutional
framework on public debt
management and to
establish objectives to
ensure the financial
security and the medium-
term indicators. The
decision approving the
long-term public debt
management strategy
2010-2020 has, for the first
time, consolidated both
foreign debt, domestic debt
and local authority’s debt,
apart from the budget and
SOEs’ debt. The Decision
includes the approval to
- GOV issued Decision
Number 689/QD-TTg,
dated May 4, 2013,
approving a medium-
term debt management
program for the period
2013-2015.
- The Ministry of
Finance has prepared
an updated medium-
term debt management
program for the period
2016-20, with
strengthened risk
analysis based on
additional scenarios
and updated
macroeconomic
assumptions
APPENDIX D 96
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
the following policies: (i)
norms on budget deficit of
medium to long term and
the borrowing limits; (ii)
structure/ composition of
the debt toward an increase
in domestic debt
proportion; (iii) medium to
long-term thresholds of
public debt and repayment
ability.
1.4) Developed
indicators and
monitoring system
for oversight of SOE
financial
performance.
- The result of MDTF2’s
support has an direct or
indirect impact to the
development of the Decree
61/2013/ND-CP regarding
promulgation of the
regulations on financial
supervision, financial
performance evaluation
and disclosure of financial
information of the
enterprises owned by the
State and of the enterprises
with State capital; the
Decree 71/2013/ND-CP
regarding regulations on
investmetn of State capital
in enterprises and financial
management of enterprises
which State hold 100% of
charter capital; and the
circulars providing
implementing guidelines
such sas Circular 153, 158,
171 and 173.
- The draft criteria/indicators
and processes for
evaluation of financial
situation of SOEs and
enterprises with State
capital in the designated
areas of transportation,
industry and financial
organization has been
developed and is expected
to be finalize in 12/2013.
- The result and experience
drawn from the overseas
study tour which is funded
by MDTF2 will
incorporated in the draft
Law on Management and
- The Government has
issued Decree Number
87/2015/ND-CP, dated
October 6, 2015 which
replaced Decree
Number 61/2013/ND-
CP, dated June 25,
2013, adopting the
audited reports on the
public dissemination
of the key financial
performance of all
State Economic
Groups
97 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
Utilization of State Capital
Invested in Enterprises,
which is expected to
submit to the National
Assembly in May/2014.
1.5) Completed audit
of IT security
arrangements in
MOF with action
plan for follow up
implementation.
- Completed the review of
security of TABMIS
system, in 8/2013.
- Completed the evaluation
of current status of
financial sector
information safety and
security, in 11/2013
- Completed the
development of roadmap to
implement and ensure
financial sector
information safety and
security to 2020, in
11/2011.
- It is expected that the
proposed contents of the
Policy on financial sector
information safety and
security and Feasibility
Study Report for the
project on financial sector
information safety and
security will be completed
within 12/2013. The report
will serve as a prerequisite
for the implementation of
the Project on financial
sector information safety
and security in the years to
come.
- Based on the security
review results, the
IBM (contractor) has
made corrective
measures to improve
the security of
TABMIS.
- MOF issued a decision
3317/QD-BTC dated
24/12/2014 on
regulations on
financial information
security for public
financial information
systems.
1.6) Piloted and
applied Regulation
on evaluation of
implementation of
PFM legislation in
Vietnam.
- Carried out pilot evaluation
of the situation on PMF
legislation implementation
in the field of (i) State
budget management; (ii)
corporate finance; (iii) tax
administration; and (iv)
social security.
- Pilot evaluation reports of
international and national
consultants in the above-
mentioned fields have been
completed in 5/2013;
11/2013; 4/2013 and
4/2013, respectively.
APPENDIX D 98
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
- During the process of pilot
evaluation, MOF has
developed: the method, the
criteria and the processes
to evaluate the legislation
implementation in PFM,
and then, after the pilot
evaluation exercises have
been completed, such
evaluation method and
processes have been
improved/finalized, and
turned it to the Regulation
on evaluation of legislation
implementation situation in
PFM;
- The Regulation has been
approved by the minister
of MOF through his
Decision 2247/QĐ-BTC
dated 06/9/2013, which
serves as the legal basis for
carrying out evaluating the
legislation implementation
situation in PFM across the
country.
1.7) Adopted legal
framework for the
establishment of
internal audit
mechanism in
Vietnam.
- Completed drafting of
Decree on Internal Audit
which was submitted to
N.A in 2011 in seeking for
its adoption, however, due
to the fact that it was
planning to have the
Constitution and the
Budget Law revised, so a
number of relevant legal
documents, including the
Decree on Internal Audit,
would be issued after the
adoption of the revised
Constitution and Budget
Law.
- The Government
adopted the
Accounting law 2015,
which mandates
establishment of the
Internal Audit function
in government
agencies. The
accounting and audit
policy department of
MOF is tasked with
drafting the internal
audit regulation
pursuant to the
Accounting law. The
internal audit function
will be managed by
the supervision
department at the line
ministries.
2) Improved
revenue
mobilization
through: equitable
and efficient tax
policies; and
2.1) Reviewed
implementation of 11
tax policy measures
with
recommendations
submitted to MOF.
See appendix G for
With the MDTF2 support,
MOF has completed
implementing 3 proposals
on development of the tax
laws (under IP1); and
reviewed/ evaluated some
11 types of taxes (under
- The revised law on
import, export tax was
issued in April 2016
that promulgates the
new contents and
99 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
efficient customs
administration.
borrower comments
re natural resource
tax; environmental
protection tax;
personal income tax;
and import and
export duty tax law.
IP2). Accordingly, it has
submitted to the MOF,
Government and N.A for
promulgation of the
following legislations/legal
documents:
1. Tax Law on
Environmental
Protection (2010);
Decree 67/2011/NĐ-
CP providing
guidelines to
implement the Tax
Law on Environmental
Protection; Circular
guiding the
implementation of
Decree 67/2011/DN-
CP; Decree 69 to
supersede the Decree
67/2011; Circular 159
to revise the Circular
guiding the
implementation of
Decree 67/2011.
2. Tax Law on
Utilization of Non-
agricultural Land
(2010);
3. Law on Amendment
and Supplementation
of a Number of
Articles of the Law on
CIT (09/6/2013);
4. Law on Amendment
and Supplementation
of a Number of
Articles of the Law on
PIT (23/1/2012);
5. Law on Amendment
and Supplementation
of a Number of
Articles of the Law on
VAT (19/6/2013).
- Based on assessment of the
achievements of the
existing tax policy on land,
the consolidation of the
constraints and obstacles
faced during the
implementation of each
land tax policy, MOF has
studied and then proposed
revised tax rates in
accordance with the
recently signed trade
agreements.
- Law on fees and
charges was issued in
November 2015 that
promulgates the list of
fees and charges to be
collected as well as the
authorities responsible
for setting the price of
user fees and charges.
- Revised law on special
consumption was
issued in November
2014 that applies
revised tax rates
towards selected
special consumption
goods.
APPENDIX D 100
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
some solutions regarding
amendment and
supplementation of
policies and contents
which is more appropriate
with the practical situation
and contributed to the
revision and amendment of
the Law on Land which
has been recently adopted
by the NA.
- MOF has completed the
report on evaluation of the
implementation situation
of natural resources tax
policy, with
recommendations on what
contents need to be revised
or amended toward making
the natural resource tax as
an effective tool to
manage, protect and
promote the effective and
efficient use of national
resources, particularly the
non-renewable resources;
promoting exploitation of
natural resources in
association with deep
processing and limit export
of unprocessed resources;
recommendations on
revision and amendment of
regulations on tax
calculation, tax rates and
tax collection method for
appropriate with practical
situation of natural
resource exploitation in
each period. NA issued its
Resolution 928 regarding
new tax rates for natural
resources, and this is an
important result from the
review of this tax policy
area.
- With the technical
assistance provided by
MDTF2, MOF has carried
out review and evaluate the
situation of
implementation of special
consumption tax policy
101 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
area, and recommended
what need to be revised or
supplemented. It has
completed the Report on
summary of special
consumption tax policy
implementation, with
recommendation on what
to be revised or
supplemented. The report
recommended a number of
new contents such as
calculation of tax liabilities
on tobacco, etc, and
inclusion of new products
like electronic games. The
report provide usable input
for the amendment of the
Special Consumption Tax
Law. At present the draft
Revised Special
Consumption Tax Law has
been submitted to the MOF
leader, and is planned to be
submit to the NA for
issuance in 2014.
- Through the MDTF2’s
support, MOF understands
the current situation on
implementation of the
policies on fees and
charges at the agencies,
units and localities, at the
same time it completed the
Report on review of fees
and charges
implementation situation,
with recommendation on
what need to be revised or
amended toward:
+ Research and consider to
include more agencies who
should have authority to
issue legal documents
regarding the collection
rates, regimes, payment,
management and
utilization of fees and
charges to ensure the
consistency with the
specialized legislations and
suitable with practical
situation.
APPENDIX D 102
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
+ Research to further
delegate the authority to
local authority to make
decision on fees and
charges.
+ Research to make
amendments in a manner
that facilitate the agencies
and units those who have
revenue from fees and
charges can take the
initiative in using this
revenue in order to
implement the mechanism
of autonomy and
socialization.
The report has contributed
to the issuance of legal
documents on the rates of
fees and charges (each
year, MOF issues some 20-
30 Circulars regarding fees
and charges) and will
contribute to the
development of the Law on
Fees and Charges which is
planned to submit to the
NA for issuance in 2015.
- MOF has completed the
Report on review and
evaluation of the current
implementation situation
of import/export tax/duties
policy from different
angles (from the view
point of various objects)
from which it come up
with recommendation on
revisions and amendments
to optimize the current tax
policy of this kind and at
the same time to meet the
requirements regarding
international economic
integration. According to
the NA’s working agenda,
in 2015, MOF will submit
the NA for its adoption of
the Revised Law on
Import/ Export Tax.
- Apart from reviewing 11
tax policy areas and
issuance of the legal
103 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
documents as above-
mention, the Project has
also granted approval to
review the twelfth tax
policy area that is
“evaluation of
implementation situation
of real-estate tax policy.”
This is expected to
complete within 12/2013.
This is considered as an
important content that help
the MOF in drafting and
submitting for issuance of
the Law on Real-estate in
2015 in accordance with
the working agenda
registered with the NA.
2.2) Developed
National Single
Window System
consistent with
ASEAN
requirements for
customs
administration.
- MOF’s leaders decided not
to use funds from MDTF2
for this proposal, but
another source of funds to
implement this
3) Strengthened
expenditure
management
through higher
accounting
standards, and
improved capacity
in financial
reporting, cash
management, state
asset management
and debt
management.
3.1) Developed
roadmap for Public
Sector Accounting
Standards with
finalized gap
analysis.
- Completed developing
Roadmap for
implementation of Public
Sector Accounting
Standards in Vietnam.
Accordingly, the
implementation will be
splited into many phases,
with a number of standards
per each phase, based on
the principles of (i) those
international standards that
are with clear contents and
suitable with the conditions
of Vietnam, requiring little
revision or
supplementation – will be
published first; (ii) those
that are more complicated
and require more time to
study, research, revise or
supplement (or even,
depending on the budget
law, the financial policy of
Vietnam) will be published
later on. Specifically, it is
planned that, in 2013-2015,
- The Government
adopted the
Accounting Law
(2015) to develop the
consolidated the
Government financial
statement in which
public accounting
standards will be
applied.
APPENDIX D 104
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
Vietnam will update some
15 Public Sector
Accounting Standards; in
2016-2017, Vietnam will
update 8 PSASs; and 2018
it will update another 9
PSASs
- MOF has also clearly
determined the objects to
apply the PSASs,
accordingly, the
administrative and public
service delivery units will
apply the accrual based
accounting standards while
the revenue-creating and
spending units will apply
the cash based accounting
standards.
- On that basis, it has clearly
determined who will be to
prepare the report and
aggregate the Government
report, the format of
Government report, and
developed a set of general
report for the whole nation
to improve the accuracy
and integrity of financial
reporting as well as aligned
with international
accounting standards.
3.2) Reviewed the
existing corporate
accounting standards
in Vietnam with
recommendations for
update.
Under the project, it has
reviewed 13/26 corporate
accounting standards and is
expected that, by 12/2013, it
will submit for the issuance by
the MOF 8/26 corporate
accounting standards, namely:
1. General standard re the
framework for development
and presentation of financial
statements
2. Standard re. inventories
3. Standard re. tangible fixed
assets
4. Standard re construction
contracts
5. Standard re borrowing costs
6. Standard re revenue;
7. Standard re price difference;
- The Accounting Law
2015 requires MOF to
prescribe accounting
standards on the basis
of international
standards. The most
recent Circulars issued
by MOF are Circular
200/2014/TT-BTC
applicable from
January 201510,
Circular 210/2009/TT-
BTC and Circular
202/2014/TT-BTC.
These Circulars
provide guidance on
10 This supersedes Decision 15/2006/QD-BTC.
105 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
8. Standard re investment, joint
ventures and associate
the Vietnamese
Corporate Accounting
System and try to
bring VAS more
closely align with
international
accounting standards
3.3) Developed
model and
implementation
roadmap for State
Accounting General
function.
- State Treasury has
completed draft Project on
State General Accounting
(incl. model and roadmap
to implement the SGA
model). This will be
submitted for the approval
of MOF in 12/2013.
- The State General
Accounting function
was established
pursuant to Decision
1188/QD-BTC in
2014. The SGA will
be responsible for
preparing the
consolidated
Government financial
report in accordance
with public accounting
standard.
3.4) Developed
roadmap for the
development of
Vietnam’s bond
markets.
- Completed drafting the
bond market roadmap in
end of 2012, which
focusing on, for the first
hand, the government bond
market, including method
of primary issuance and
secondary transactions,
buyback, development of
market service
infrastructure, and
development of organized
investor system.
- The Ministry of
Finance issued
Circular 111/2015/TT-
BTC regulating the
Government bond
issuance in the
domestic market. It
also provides
procedure for bond
buyback.
3.5) Developed
modern cash and risk
management system
toward security and
effectiveness with
improved
coordination between
cash and debt
management.
- With the support of
MDTF2, under IP1, in
supporting the
Government’s policy that
is to manage non-cash
revenue and expenditure
(Circular 164 and Circular
33), State Treasury
developed the inter-
banking and bilateral
payment processes, making
it the basis for the ST to
implement inter-banking
and bilateral payment, and
to develop the safety and
security processes in
bilateral payments
- Decree 24/2016/ND-
CP on cash
management policy
was issued on April 5,
2016. The State
Treasury has
implemented TSA
arrangements,
consolidating cash
balances from more
than 700 accounts.
Cash balance
consolidation has
helped optimize the
use of cash balance,
minimized borrowing
requirements and
minimized the risk of
APPENDIX D 106
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
- Under IP2, thanks to the
Project support through the
consultants’ reports of high
quality and the experience
learnt from other countries,
ST has completed
developing the cash flow
forecast system and
developing the cash fund
control and risk
management system. These
outputs have contributed to
the development of the
Circular guiding the cash
flow forecast process, as
well as the Decree on cash
fund management, which
includes the content
regarding cash fund risk
management. The draft of
Circular and Decree has
been developed, but the
issuance of these will be
made upon the revised
Budget Law has been
issued.
temporary cash
shortages.
3.6) Developed
model for asset
management system
with reviewed
business processes
and finalized gap
analysis.
- With the technical
assistance provided by the
Project, MOF has selected
an appropriate asset
management model to
implement asset
management in proactive
manner. MOF has
conducted assessment of
the information technology
applications in process
management of current
assets, reviewing data in
the national database of
State Assets; assess gaps
and thereby deliver a legal
and recovery process to
consolidate existing
databases. On that basis,
the experts helped build
standardized process data
in the national database;
- Conducted overseas study
tour and engaged the
international consultant to
provide international
experience in application
- The Ministry of
Finance is drafting the
revised State Asset
Management Law
following the
Constitution 2013.
The output of MDTF
provided helpful
background and
analyses to the
revision of the state
asset management
law. The draft Law is
expected to be
submitted to the
Government in May
2016 and the National
Assembly in late 2016.
It is expected to be
passed by the NA by
the first half of 2017.
107 APPENDIX D
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
of information technology
in managing the public
assets and recommend
appropriate solution for
application in Vietnam.
The standardized business
processes on public asset
management have been
piloted in 2 ministries and
2 provinces for the first
time, and then the
additional training has
been delivered to another 3
ministries and 32
provinces.
- After completed
implementing the original
approved plan (i.e.
development of model,
standardized business
processes on public asset
management, piloting and
provision of training for
selected ministries and
provinces). The Public
Asset Management
Department requested
additional resources to
extend the pilot review and
standardization of state
assets to increase the
impact of the project.
Accordingly, 10 additional
provinces and then 3
further provinces were
covered. Thus making a
total of 5 ministries and 45
provinces have been
trained on standardization
of data on state assets,
including 2 ministries and
15 provinces of direct
piloting.
3.7) Developed the
policy on centralized
procurement of state
assets
- Evaluated the
implementation of the pilot
centralized procurement of
state asset.
- Learned experience from
the UK study tour on the
implementation of
centralized procurement.
- The Prime Minister
has issued Decision
08/2016 dated
February 26, 2016 to
institutionalize the
centralized
procurement
mechanism adopting
the framework
contract concept that
APPENDIX D 108
Intermediate
Outcomes
Indicators Results achieved as of
December 2013
Results achieved from
2014-present
- Drafted Decision and
circular providing the
implementation guidelines,
including the procedures to
carry out centralized
procurement of state assets
of MOF
the MOF learned from
UK experience
through the study visit
to UK under the
MDTF-2.
109
Appendix E. Review of PFMRP ISRs
ISR Interval ISR Comment
# Date Mission Mission ISR SM CD Remarks
1 6/30/2003 5/22/2003 1.3 0 0 Initial PSR. Well detailed.
Original TL remains
involved.
2 12/19/2003 10/15/2003 2.2 4.9 1 Minimal 0 Well detailed. Original TL
remains involved and
sectoral experts part of
mission. Risks cited but not
discussed (to ISR4)
3 5/26/2004 4/16/2004 1.3 6.1 1 Helpful 0 Well detailed. Original TL
remains involved. Sign of
early slippage in CoA.
4 8/2/2004 7/2/2004 1.0 2.6 0 0 Well detailed. Original TL
remains involved. Good
intensity of supervision. Sign
of early slippage in CoA and
TSA. Implicit questions over
adequacy of Bank
procurement procedures for
IT systems.
5 6/15/2005 5/14/2005 1.1 10.5 0
approved
no
comment
1 Detailed Change of reporting format
from PSR to ISR. Many of
the required fields left empty
and failure to provide basic --
e.g.; contact, team
composition, disbursements
and covenants -- or critical
information -- notably issues
and pending actions. PDO
indicators entered as per
PAD but not intermediate
ones -- which had been
formulated in PAD.
Disbursement lag of 9
months ignored. CD
comments provide specific
feedback on ISR quality and
realism.
6 12/28/2005 5/14/2005 7.6 0.0 0 1 Detailed No supervision for close to 8
months. Status write-up
improved from ISR 5 but
other issues remain.
Disbursement lag has risen to
15 months which contradicts
APPENDIX E 110
S IP rating. Earlier CD
comments not taken into
account and additional ones
provided.
7 7/15/2006 3/15/2006 4.1 10.2 0
approved
no
comment
1 Detailed Less detailed status report
with none of the problems
identified earlier addressed.
All IP and other ratings S
despite 18 months
disbursement lag.
8 3/29/2007 12/15/2006 3.5 9.2 0
approved
no
comment
1 Detailed Slightly more detailed status
write-up following MTR.
None of the reporting
problems identified earlier
addressed. All IP (except
component 3) and other
ratings S despite 26 months
disbursement lag. Notable
delays include CoA (initial
completion date Fall 2004).
Proposed project
restructuring limited to
extension and additional
financing, even though other
areas that continue to be
pointed out by CD (notably
overhaul of indicators). CD
comments quite
comprehensive.
9 2/20/2008 11/15/2007 3.2 11.2 0
approved
no
comment
1 Detailed Complete write-up of key
issues, including a handful
that should have been
identified at the MTR. Other
shortcoming in previous
ISRs still present, including
unrealistic IP ratings.
Required extension still not
undertaken -- due to apparent
push back Country
Management level. Original
disbursement lag of 34
months and revised of 4
months after less than a year
highlighted as a "great source
of concern" in CD comments
which are extensive (2
111 APPENDIX E
pages). Request for
immediate reissue of ISR.
10 4/23/2008 3/14/2008 1.3 4.0 0
approved
no
comment
1 ISR reissued less than 2
months after this was
requested by CD. Adequate
write-up of key issues and
actions -- including
continued problems with
CoA. Other shortcoming in
previous ISRs still present,
including unrealistic IP
ratings. Required extension
of closing date still not
undertaken. - due to
apparent push back Country
Management level. Original
disbursement lag of 37
months and revised of 7
months suggests the
proposed extension of less
than 2 years will be
insufficient. I.
11 12/17/2008 10/29/2008 1.6 7.6 1 1 Adequate write-up of key
issues -- including problem
with UNCTAD contract
under component 3. Other
shortcoming in previous
ISRs still present, including
unrealistic IP ratings.
Required extension of
closing date still not
undertaken -- due to apparent
push back Country
Management level. Original
disbursement lag of 42
months and revised of 10
months suggests the
proposed extension of less
than 2 years will be
insufficient. IP rating now
MS (performance would
justify MU). CD comments
summarizes previous -- still
no CoA.
APPENDIX E 112
12 1/30/2010 5/15/2009 8.7 6.6 0
approved
no
comment
1 Detailed
but late
Adequate write-up of key
issues by component but not
by objectives. TABMIS
implementation problems
well documented. Extension
of 2 years approved, but
insufficient given 50 months
original disbursement lag. IP
rating remains MS. CD
comments on target, even if
sent after 20 days, and
question close relevance om
an ISR issued 9 months after
the mission.
13 10/13/2010 6/15/2010 4.0 3.0 1 0 NB: No ISR prepared after
March 2010 mission and ISR
based on June mission under
new format including ORAF.
Adequate write-up of key
issues and actions. Indicators
not revamped and some
information not provided.
Further extension envisaged
in conjunction with
additional financing. ISR not
submitted to CD.
14 1/4/2011 10/15/2010 2.7 4.1 1 0 Adequate write-up of key
issues and actions. Previous
issues still present. Further
extension envisaged in
conjunction with additional
financing. Narrow
supervision team with no
sectoral experts (expect for
second supervision). ISR not
submitted to CD.
15 4/1/2012 5/31/2011 10.2 7.6 1 1 Risk rating increased to
substantial without
explanation -- medium in
previous ISR. M&E rated
substantial in all ISRs despite
evident issues repeatedly
noted in CD comments.
Additional financing
approved and closing date
extended by a total of four
years. Team also supervised
mission on March 2010. ISR
issued late.
113 APPENDIX E
16 2/23/2013 11/26/2012 3.0 18.2 1 1 Evidence of SM comments
being provided on draft ISR.
Indicators revised through
additional financing. Risk
appropriately reduced to
moderate.
17 10/16/2013 11/26/2012 10.8 0.0 0
approved
no
comment
1 Government request to
amend indicators noted and
CD requests this be reflected
in Final ISR -- there was
none filed prior to closing.
No record of formal
supervision after November
2012.
114
Appendix F. List of Persons Met
Government Officials
Dept. of Public Assets Management: 1. Mr NGUYEN Tan Thinh, Deputy General Director
2. Ms PHAM Thi Tuyet, Deputy Head of Infrastructural Assets Division
3. Ms NGUYEN Thi Phuong Hao, Deputy Head of National Center of Public Assets
Database
4. Ms HOANG Thu Quynh, Deputy Head of Administrative Division of the Dept.
General Dept of Taxation (GDT):
1. Mr DANG Tuan Hiep, Deputy Director of International Taxation Department under GDT
2. Ms NGUYEN Thi Huyen My from Transfer Pricing Audit Division
3. Ms NGUYEN Minh Huong from Policy Dept under GDT.
Tax Policy Department:
1. Ms Tran Thi Phuong Nhung - Deputy Division Head (I believe she was the lady who did
most of the talking)
2. Tran Thi Nguyet Tu - Officer
3. Dao Thi Huyen Trang - Officer
4.Tran Thi Ngoc Linh - Officer
5. La Thi Noi – Officer
Vietnam State Treasury:
1. Ms. DANG Thi Thuy, Deputy General Director of Vietnam State Treasury, former project
director
2. Ms. VU Thanh Huyen, Director of International Cooperation Department, former
TABMIS project component manager
3. Mr. BUI The Phuong, Director of Information Technology Department
4. Mr. DUONG Van Tuan, Deputy Head of IT support Division – IT Department
5. Mr. DANG Viet Cuong, official of IT Department
6. Ms. NGUYEN Thi Hoai, Deputy Director of State Accounting Department
7. Mr. LUU Hoang, Director of Legal & General Affairs Department
8. Ms. TRAN Thi Hue, Director of State Cash Management Department
9. Ms. NGUYEN Thi Ngoc Hieu, Head of Capital Mobilization Division – State Cash
Management Department
10. Ms. BUI Thi Bao Quynh, Head of Accounting Department, Treasury Transaction Centre
11. Ms. NGUYEN Thu Trang, official of International Cooperation Department
12. Ms. DO Thi Huyen Trang, official of International Cooperation Department
Ministry of Agriculture and Rural Development (MART):
1. Mrs PHAM Thanh Huyen, Deputy Director of finance dept. (MART)
2. Mr PHAM Van Hiep, staff of finance dept. (MART)
3. Mr NGUYEN Tung Lam, staff of finance dept. (MART)
4. VU Thanh Liem, staff of planning dept. (MART)
115 APPENDIX F
5. Ms VU Thanh Huyen, Tamis project component manager, Director of international
cooperation, Vietnam State Treasury
6. Mr DUONG Tuan, deputy head of division, IT dept., Vietnam State Treasury.
Ministry of Health:
1. Ms PHAM Thi Minh Nga, deputy head of finance career division, finance and planning
dept.
2. Ms VO Minh Hai, deputy head of aid division, finance and planning dept.
3. Mr TA Quang Thien, staff of capital expenditure division, finance and planning dept.
4. Mr NGUYEN Viet Hong, staff of finance career division, finance and planning dept.
5. Ms NGUYEN Thi Bich, head of finance and accounting division of Administrative Dept.
6. Ms VU Thanh Huyen, Tamis project component manager, Director of international
cooperation, Vietnam State Treasury
7. Mr DUONG Tuan, deputy head of division, IT dept., Vietnam State Treasury.
Legal Department MOF:
1. Ms HO Thi Hang, Deputy Director of legal dept.
2. Ms NGUYEN Ban Mai, staff of legal dept.
State Budget Dept.:
1. Mrs TRAN Thi Kim Hien, head of statistics division
2. Ms NGUYEN Minh Tam, staff of statistics divisions
3. Mr DUONG Tien Dung, head of budget management
4. Mr NGUYEN Tri Phuong, deputy head of budget estimates division
PFMRP and MDTFII PMU
1. Ms. DANG Thi Thuy, Deputy General Director of Vietnam State Treasury, former project
director
2. Mr. HOANG Trung Luong, Deputy Director of State Accounting Department - VST,
former project deputy director
3. Mr. NGUYEN Ngoc Duc, official of Inspection Department - VST, former project chief
accountant.
4. Mr. Nguyen Ba Toan
Development Partners
Ms. Lien DFID
Ms. Chau CIDA
Ms. Nguyen Hong Giang SECO
World Bank Staff
Ms. Victoria Kwakwa
Mr. Minh Van Nguyen
Ms. Tran Thi Lan Huong
Ms. Quyen Hoang Vu
Mr. Alwaleed Fareed Alatabani
APPENDIX G 116
Appendix G. Borrower Comments
117 APPENDIX G
APPENDIX G 118
Borrowers Comments Attachment
SUMMARY OF FEEDBACK FROM THE MINISTRY OF FINANCE
ON THE DRAFT PROJECT PERFORMANCE ASSESSMENT REPORT ON THE
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT AND THE MULTI-
DONOR TRUST FUND PHASE II (MDTF II)
I. MDTF-2
1. Experience and lessons learnt:
In the period of preparation for project completion, the Project worked with WB experts to
conduct studies and prepared a project completion report, which recommended the PFM reforms
to be followed up after the completion of the Project. The draft report specifies this as an
encouraging feature. This is practically the starting point for the discussion on the preparation of
the AAA Program that the Ministry of Finance is implementing. Therefore, the Ministry of
Finance would like to include this into the part on "experience and lesson learnt" - an important
outcome of the mission in addition to the assessment of the performance and efforts.
II. PFMRP:
1. Refer to Table 2.2 (Project cost planned and actual, by component and financing course):
The data in the "planned" column only reflects the original budget of the project, and is not
updated with the additional financing, exchange rate gain/loss and increasing counterpart funding
of the Government. Therefore, it is suggested to update the report with data and disbursement
rates for financing sources as follows:
Cost %
By component: Planned Actual Planned
Strengthening Treasury and Budget Management 83.63 77.94 93
Strengthening State Budget and Investment Planning 3.58 3.13 88
Strengthening Management of Public Debt and Monitoring
of SOE Fiscal Risks 3.28 2.43 74
Project Management Support 5.63 4.22 76
Other (recurrent operating costs and contingencies) 0.00 NA
Total 96.13 87.79 91
By financing source:
119 APPENDIX G
Borrower 10.14 8.17 81
DFID 11.32 10.5 92
IDA 74.68 69.15 93
Total 96.13 87.79 91
2. Refer to Table 2.4 (Principle changes and dates):
Please update the date of DFID grant closing on June 30, 2011.
3. Refer to Para. 2.19:
The statement “Project management was also strengthened after the MTR, through the
appointment of a senior MOF official as a full time coordinator..." is not accurate because right
at the beginning of the Project, the Ministry of Finance already appointed a departmental director
to act as the full time PMU Director in compliance with the Agreement.
4.Refer to Para. 3.7:
The statement in this paragraph “The scope of the MTFF was a bit narrower than in the original
indicator" is not accurate. The piloting of the Medium-term Fiscal Framework and the Medium-
term Expenditure Framework from 2005 - 2007 was launched in 04 sub-national governments
including Hanoi city, Ha Tay, Binh Duong and Vinh Long. In 2008, Ha Tay province was
merged into Hanoi city, then the pilot was in 3 provinces. Please include this information in the
draft report.
5. Refer to Para. 3.9:
The statement “The revised State budget Law promulgates the preparation of the five-year
medium-term budgetary framework" is not accurate and complete. Please revise it into "The
revised State Budget Law promulgates the preparation of the five-year financial plan and the 3-
year financial-budgetary plan”.
6. Refer to Para. 6.3:
Point (i) states that: “Lack of on-going support for cross-departmental working, particularly
between MOF, State Bank of Vietnam and MPI. As noted in the previous section, this risk has
not been eliminated." In practice, the risk is being reduced through the support of the Ministry of
Finance (the State Treasury) for the use of TABMIS by sector ministries, including: training,
user training; central help desk to support via email, hotlines; regular direct phone calls to
understand obstacles and to provide on-site supports (for difficult issues) or off-site support (for
simple issues).
7. Refer to Para. 6.5:
APPENDIX G 120
Point (iii) is not accurate about the process of budget revenue collection as follows: "Tax and
customs receipts are deposited in bank accounts controlled by Customs and Tax Departments
and deposited twice a day in TSA (Treasury Single Account). The Treasury receives this
information via an interface with the Central Tax System, which enters it directly into the
General Ledger module. Non-tax receipts are recorded in the account receivable module by the
Treasury on the basis of information received from the Spending units.”
Please revise the above as follows: "Tax and customs receipts are deposited in Treasury Single
Accounts (TSAs) of the State Treasury. Budget revenue information is exchanged among the
State Treasury, Tax and Customs Departments and commercial banks through centralized Tax
Collection systems/applications (TCSs), the Tax Collection e-Portal, Customs e-Portal. The State
Treasury receives and controls budget revenue information and runs the automated interface
between TCS and TABMIS GL. Non-tax revenues are recorded in the TABMIS GL on the basis
of information received from TCS, Finance Departments or Spending units”
8. Refer to Para. 6.5:
The statement in point iv that “TABMIS is connected to the Banking system by an automated
interface (SWIFT)." is not accurate and complete. Please revise it into "TABMIS is connected
with banking systems via the VST payment applications for both bilateral settlement and inter-
bank clearance IBPS and then via enterprise service bus connects to banks under the two
mechanisms of webservices and MQ”
9. Refer to Para. 8.7:
The statement “the main issue that the PMU had to deal with was related to the non-performance
of the IV&V consultant. Following the change in team members, performance was no longer
deemed satisfactory... The Government thus relied on the advice of the TABMIS provider, which
lacked independence." is not accurate. In practice, upon the terminatio of the IV&V contract, the
Government continued to use several individual and firm consultants to support in the
assessment of System functionality and in TABMIS contract management.
10. The list of persons met (page 116) has many names repeated, please revise and revise as in
Annex 2.
11. Specific comments on Appendix C of the draft report is provided in Annex 3.
121 APPENDIX G
Annex 2
LIST OF VST AND PMU OFFICIALS MET WITH THE IEG ASSESSMENT MISSION
1. I/ Vietnam State Treasury
2. 1. Ms. DANG Thi Thuy, Deputy General Director of Vietnam State Treasury, former
project director
3. 2. Ms. VU Thanh Huyen, Director of International Cooperation Department, former
TABMIS project component manager
4. 3. Mr. BUI The Phuong, Director of Information Technology Department
5. 4. Mr. DUONG Van Tuan, Deputy Head of IT support Division – IT Department
6. 5. Mr. DANG Viet Cuong, official of IT Department
7. 6. Ms. NGUYEN Thi Hoai, Deputy Director of State Accounting Department
8. 7. Mr. LUU Hoang, Director of Legal & General Affairs Department
9. 8. Ms. TRAN Thi Hue, Director of State Cash Management Department
10. 9. Ms. NGUYEN Thi Ngoc Hieu, Head of Capital Mobilization Division – State Cash
Management Department
11. 10. Ms. BUI Thi Bao Quynh, Head of Accounting Department, Treasury Transaction
Centre
12. 11. Ms. NGUYEN Thu Trang, official of International Cooperation Department
13. 12. Ms. DO Thi Huyen Trang, official of International Cooperation Department
14. II/ PMU OF PFMRP
15. 1. Ms. DANG Thi Thuy, Deputy General Director of Vietnam State Treasury, former
project director
16. 2. Mr. HOANG Trung Luong, Deputy Director of State Accounting Department - VST,
former project deputy director
3. Mr. NGUYEN Ngoc Duc, official of Inspection Department - VST, former project chief
accountant.
APPENDIX G 122
Annex 3
Comments to the draft Appendix C. TABMIS
As in the draft report VST comments
Appendix C. TABMIS (page 85)
With the advent of web based
technologies, alternative means are now
available to give spending units access to
the system. Costs may thus be contained
while the role of the treasury to exercise
control on payments is retained. SUs can
now have access to a web-based portal that
would enable them to send a transaction to
the system. However, this transaction
would not update the system data bases
and would only create a file that would
subsequently be used by the Treasury
office to review the transaction and update
and process it for payment.
Please revise this paragraph as SU can
create transactions in the public services
provided by the web Portal to send the
transaction information to the State
Treasury and then interfaces it to TABMIS
on the basis of SUs using digital signatures
for authentication and security purposes.
The State Treasury already demonstrated
this functionality to the Assessment
Mission in March 2016.
Appendix C. TABMIS (page 85)
Web portals can also be set up to enable
budget administrators to have direct access
to the system to carry out their budget
management responsibilities and for line
ministries to get access to budget execution
figures and reports. Figure 3 above shows
the working of web-portal based access to
the system.
Please revise this paragraph because the public
services in the web Portal do not allow look-up
budget execution figures and reports. Line
ministries access the reports directly in
TABMIS.
Appendix C. TABMIS (page 86)
The Vietnam Treasury has now started a
pilot to provide such access to SUs and
other end users. It will enable them to send
transactions to the system electronically
via a web portal instead of being required
to bring them physically to the Treasury
offices. Currently the pilot is being tested
in 5 provinces with selected SUs in each
province being given access. At present the
access is limited to sending transactions
such a payment requests, but there are
Please revise this paragraph because now the
State Treasury already completed the pilot of
public services at the end of Quarter I, 2016 in
5 cities and a selected number of SUs. In
addition to allowing SUs to send payment
requests, the web Portal will develop on-line
balance look-up. The budget execution reports
can be accessed on TABMIS.
123 APPENDIX G
plans to expand the functionality to include
querying the system data bases and
producing reports such as budget execution
reports.
Appendix C. TABMIS (page 84)
The Use of a Web-Portal for Systems
Access. A spending unit based system
deployment is in principle preferable since
it is desirable to pick up the transaction at
its origination point. However there can be
significant cost implications involved in
such a deployment. The number of
spending units in a country can be quite
large, compared to typical Sub Treasury
office numbers (In Vietnam the SUs are
estimated to be around 100,000, while the
Treasury and Finance offices are around
1,500).
Please revise the number of SUEs in TABMIS
to be about 300,000 units.
Appendix C. TABMIS (page 83 and
page 91)
The TABMIS is a large country wide
system. At present about 11,000 users
connect to the system country wide68. Of
these about 7,500 are Treasury officials
and 3,500 are officials of the Finance and
Planning Departments at the center, the
provinces and the districts. The current
transaction volumes range from about 2.2
million transactions per month in Jun 2015
to around 3.8 million transaction per
month in December 2015, the close of the
fiscal year. Thus approximately 30 million
transactions are processed by the system in
a year.
The mission asked the Treasury staff to run
a profile of expenditure transactions. This
is tabulated below for one full year of
transactions (about 30 million) for the year
2015. It indicates that only 7.8% of the
transactions (above VnD 200 million)
Please revise it into about 30 million
transactions to be consistent between two
sections. The text on 3.8 million transactions
can be revised into only in December 2015.
APPENDIX G 124
account for 88% of the budget processed
through TABMIS.
Appendix C. TABMIS (page 91)
Number of Users72: Treasury has 11,500
named user licenses. At present the
maximum number of concurrent users is
around 7,700 and on average this number
is 4,000.
Please revise it into 10.730.